DOCUMENT RESUME

00054 - [A1051691

Problems Found with Government Acquisition and Use of Computersfros November 1965 to December 1976. B-115369; FGNSD-77-14.March 15, 1977. 46 pp.* appendices (27 pp.).

Report to the Congress; by Robert F. Keller, Acting ComptrollerGeneral.

Issue Area: Automatic Data Processing (1001.Contact: Financial and General Management Studies Div.Budget Function: Miscellaneous: Automatic Data P.3cessing

(100 1 .Organization Concerned: Department of Commerce; Department of

Defense; General Services Administration; Grffice ofManagesent and Budget.

Congress;ional Relevance: Congress; House Committee on ArmedServices; Senate Committee on Armed Services.

Authority* Brooks Act of 1965 (P.L. 39-306). Executive Ordler11717.

During the 11 years since enactment of the Brooks Act,GAO has issued 175 reports relating to the management and use o£automatic data processing systems in Federal programs. GAOsummarizes the inforastion from these reports to assist thaCongress, Federal managers, and other groups interested ir. dat:.processing problems. Findigs/Ctonclusions: Problems inAutomatic Processing (ADP) management include: acquisition ordata processing equipment without adequate determination ofneeds; lack of adequate studies of work to be done oralternatives; acquisition of computer equipment sooner thannecessary; poor design and planning; prescribed procurementpractices not followed; problems in acquisitions of computersunder Federal grant programs; a complicated procurement systemfor minicosputers; the expense of short term equipment leases;not enough use of alternate ejtuipment supply sources; not enoughevaluation of software requirements and sharing opportunities;and not enough standardization of data elements and codes.Recommendations: Isprovesments in ADP management will requireaction by central agencies as well as by the operating agencyconcerned. Action to make possible multiyear leases and toincrease visage of the ADP Fund would be of value in reducing theGovernment's data processing costs. More managerial attention isneeded in comnuter operations, and agencies need to police theirown activities. Inquiry into the adequacy of laws concerned withcomputer crimes is needed. (QN)

0C REPORT T'O THE CONGRESS

BY THE COMPTROLLER GENERALa:-i::, OF THE UNITED STA TES

Problems Found WithGovernment Acquisition AndUse Of Computers FromNovember 1965 To December 1976

During the 11 years since enactment of theB.u)oks Act, GAO has issue.; 175 reports relat-ing to the management and use of automaticdata processing systems in Federal programs.This report summarizes the information re-ported in these 175 reports to assist the Con-gress, Federal managers, and other groupsinterested in data processing problems andGovernment efforts to solve them.

FGMSD-77-14 1i 1 ir C, 1 . 9 7 7

COMPTROLLIR G4KNRAL OF THE UNITIED ITATKS

WASHINGTON. D.C. 20i4g

B-115369

To the President of the Senate and theSpeaker of the House of Representatives

The invention of the electronic computer has profoundlychanged the way business and government operate. It hasdo*ne much to increase productivity and has made significantcontributions in financial management, scientific research,medical research, education, and other important fields ofnational interest, as well as in the administrative activi-ties of the Federal Government.

The growth in the development and use of computers hasbeen repid and is related in great measure to efforts byGovernment managers to increase Federal productivity and tocontribute to more efficient, less costly Government. Thewidespread use of computers has been accompanied by a hostof new problems, many relating to the rapid technologicalchanges in the field. Because of these changes, effectivemanagement has required continual updating of knowledge.

For more than two decades, GAO has been studyingand reporting on problems arising from the expanding useof computer technology and its growing impact on Governmentoperations.

Public Law 89-306, commonly called the Brooks Act, whichbecame law on October 31, 1965, was dirorted at dealing withmany of these problems. It fixed responsibilities within theGovernment for coordinating purchase, lease, and maintenanceof computers; establishment of standards; and developmentof policy. Much has been accomplished as a result of theBrooks Act--savings reported by GSA are over $2 billion--but vigilance is needed to see that Government policy andpractices are consistently followed aid that agency practicesto keep abreast of technological changes carry out the act'sintent.

In the 11 years since enactment of Public Law 89-306,GAO has issued 175 reports dealing with problems in the dataprocessing field. In 1976, we were called upon twice topresent testimony on

B-115369

-- major areas of automatic data processing managementin which more inlprcvement is still needed since pas-.sage of Public Law 89-306 on October 31, 1965, and

-- computer-related crimes, physical security, and is-sues related Co the use of computers in the adminis-tration of Federal programs.

The statements preFared for this testimony provided a rathercomprehensive summary of our work in this area during the11 years. Also, additional information on these subjectsis available in the following congressional documents:

--House Report No. 94-1746, and Hearings before a Sub-committee of the House Committee on Government Opera-tions on the Administration ot Public Law 89-306,Procurement cf ADP Resources by the Federal Govern-ment, or June 28 and 29 and July 1, 1976.

-- Staff Study of Ccmputer Security in Federal Programsby the Senate Committee on Government Operations,dated February 1977.

We are issuing this report, which includes these twostatements and a list of the reports issued and tha majorissues dealt with in each report, for those intereited indata processing problems and Government efforts to solvethem.

ACTING Comptroll r Generalof the United States

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Con te n t s

Page

INTRODUCTION 1

STATEMENT OF JUNE 28, 1976, ON PROPLEMS CON-CERNING AREAS OF MANAGEMENT IN NEED OFIMPROVEMENT 4Acquisition of data processing equipmentwithout adequate determination of needs 5

Lack of adequate studies of work to be doneor alternatives 6

Inadequate assessments of utilization 9Acquisition of computer equipment sooner

than necessary 10Poor design and planning 11Prescribed procurement practices not

followed 12Avoidance of GSA authority to delegate

procurement 12Failure to obtain competition or matk,

cost determinations 13Questionable sole source procurements 14Use of ADP fund 15

Problems in acquisitions of computersunder Federal grant programs 17

Improving ADP operations 18Procurement system for minicomputers is

too complicated 19Multiyear leases 20Acquiring equipment from alternate sources

of supply 21GAO report on peripherals 22

Software requirements and sharirgopportunities not fully evalua.ted 23Action taken by central management

agencies on GAO's software findings 24Better Documentation is needed to improve

software sharing opportunities 25More standardization of data elements and

codes will help reduce high costs 27Federal standards program 27GAO reports on standards 28

Summation 29

STATEMENT OF SEPTEMBER 28, 1976, ON CRIME ANDSECURITY 30

Increases in Federal activities 3]What is a computer? 31

Page

Congressional interest in ccnputers 32Computer use in Federal progr:ms 32Why do computer systems need ]Protection? 33What are the threats to computer systems? 33Ways to handle threats 34what did GAO find? 34

Category 1--criminal actions 35Category 2--inadequate physical securityprotection 35

Category 3--iradequate controls overa-,tomated transactions 35

Computer-related crimes 35Inadequate security 38Inadequate control over automated actions 40

CHRONOLOGY OF COMPUTER USE IN FEDERAL PROGRAMS 43The 1950-1955 era 43The 1955-1960 era 43The 1960-1965 era 43The 1965-1970 era 44The 1970-1976 era 45

APPENDIX

I SUMMARY OF REPORTS ISSUED 47Improving Government-wide management

(Code A) 48Improving the way computer resources

are acquired and shared (Code B) 48Equipment leased without fully

considering cost savings availableby purchase methods (Code B-l) 48

Hardware acquired undeY Federalcontract procedures withoutconsidering other alternatives(Code B-2) 48

Computers acquired from equipmentmanufacturers without consideringalternative sources of supply(Code B-3) 49

Software requirements and sharingopportunities not fully evaluated(Code B-4) 49

Improving the use of ADP resources(Code C) 50Opportunity for savings by using

computer facilities more (CodeC-l) 50

Additional savings available byreuse of ADP repcurces (Code C-2) 50

Opportunity for greater efficiencyby using computer evaluation tech-niques (Code C-3) 50

Obtaining adequate maintenance serv-ice at reasonable cost (Code C-4) 52

Improving the planning and controllingof ADP reasources (Code D) 52

Better overall planning needed toimprove system Development anddesign efforts (Code D-1) 52

More guidance needed to improvemanagement control over ADPresources (Code D-2) 54

Better documentation is needed toimprove operations and sharingopportunities (Code D-3) 55

More standardization needed to helpreduce costs (Code D-4) 55

Better management controls neededover grantee and Governmentcontractors' ADP activities(Code D-5) 55

II LIST OF ADP REPORTS ISSUED BY GAC FROMNOVEMBER 1965 to DECEMBER 1976 58

ABBREVIATIONS

ADP automatic data processing

GAO General Accounting Office

GSA General Services Administration

NBS National Bureau of Standards

OMB Office of Management and Budget

INTRODUCTION

In the early 1950s, Federal agency practices for procur-ing and using calculators, punched card machines, and otheroffice equipment were simply applied to ADP systems as well.Generally, agencies acquired computers by leasing them fromcomputer equipment manufacturers and by trading in used orexcess equipment to the same suppliers. Most agencies makingsuch decisions considered only their own needs. Purchasingor acquiring computers in other ways or taking into accountthe nseds of other agencies when exchanging equipment wereusually not considered.

The automatic data processing (ADP) field in the FederalGovernment was in an early stage of development, and no singleGovernment agency was responsible for directing and cocrdir-ating developments in this field. Likewise, no Governmentpolicy required an agency, before trading in equipment nolonger suitable for its needs, to examine the possibilityof transferring the used equipment to other Government organi-zations.

Under the system in use during the 1950s. each agencymade its own decisions about how to acquire and use ADP equip-ment. No effective coordinating machinery was at work to seethat s8 ch decisions considered the Government's overall needs.

The Congress and GAO were very much interested in thedevelopment and use of ADP technology in the Federal Govern-ment during the early years. About 100 GAO reports were sentto the Congress from 1955 to 1965. The results of thesestudies generally called for more Government-wide coordina-tion in ADP management and recommended the establishment of astrong central management office in the executive branch.

Executive branch concern over ADP management in thefifties was usually limited to the annual budget reviewprocesses. However, ir 1959 the Office of Management andBudget (OMB) instituted a program for better overall manage-merit of this new technology. The program recognized a needfor central leadership in the executive branch and called forspecialized management of ADP, Government coordinatioh, andaccurate up-to-date information on the number and cost of elec-tronic computers in use throughout the Federal Government.

A small ADP staff was organized in OMB to carry out thisresponsibility. Its major duties included

-- formulating and pronulga'ting policy, criteria, andplanning guidice to.: :he Government ADP program;

-- reviewing and assessing progress of ADP programs inselected agencies and for the Government as a whole;

-- promoting desirable standardization in ADP systems thatare common to all agencies; and

-- using existing organizational relationships to guaran-tee effective internal and Government-wide cootdina-tion of the ADP program with related programs and ac-tivities.

From 1960 to 1965, OMB exercised its policymaking responsi-bilities by issuing many bulletins and circulars prescribingguidance, policies, and practices on selection, administra-tion, management, and use of ADP equipment and systems.

A major milestone in the ADP area was the passage ofPublic Law 89-30b i: October 1965. The Subcommittee ofthe Committee on Government Operations, under Chairman JackBrooks, held hearings in 1963 and 1965 and 'repared a bill(now known as the Brooks Act) which mandated changes in theoverall Government AnP management practices.

Public Law 89-306 provides for the economical and ef-ficient purchase, lease, maintenance, operation, and use ofADP equipment. The General Services Administration (GSA)was made responsible for the acquisition, use, and maintenanceof ADP equipment; OMB was made responsible for policy and fis-cal control aspects of ADP management. The law also gives theDepartment of Commerce responsibility for developing technicalstandards and providing technical advisory services to Federalagencies.

In May 1966 OMB issued policy guidelines to direct GSA'sefforts under the act. GSA was to extend and intensify itsprogram of distributing excess equipment and to

--review and improve the processes of obtaining andcircularizing information about equipment avail-ability,

-- seek and evaluate reasons why excess equipment wasnot claimed by agencies, and

-- help agencies arrange for the use of excess equip-ment.

In May 1968 OMB authorized GSA to acquire excessGovernment-own,:d equipment and rent the equipment to agenciesthrough the AEP Fund at rates high enough to guarantee the

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continued solvency of the Fund but lower than the ratescharged by suppliers.

OMB continued to exercise its policymaking responsibili-ties after passage of the act from 1965 through 1973. Guide-lines, policies, and information were issued to Federalagencies on ways to better acquire, manage, and use ADP re-sources. OMB also sponsored conferences on the managementof Government computer systems to review trends and devel-opments of computer technology.

In May 1973, Executive Order 11717 transferred certainfunctions to GSA and the Department of Commerce. GSA receivedthe policy control responsibility, and Commerce received OMB'sstandards responsibility, including the function of approvingstandards on behalf of the President. General oversight re-sponsibilities remained in OrB. Executive Order 11893, is-sued on December 31, 1975, called for the policy formulationfunction to be OMB's responsibility and left the standardsresponsibilities in Commerce.

The statements presented on the following pages summa-rize much of our work during the 11 years since passage ofthe Brooks Act. A summary of the reports issued starts onpage 47.

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United States General Accounting OfficeWashington, D. C. 20!48

FOR RELEASE ON DELIVERYExpected nit 10:00 a.m. ESTMonday, June 28, 1976

Statement ofDonald L. Scantlebury

DirectorFinancial and General Management Studies Division

Before theSubcommittee on Legislation and National Security

Committee on Government OperationsHouse of Representatives

onPublic Law 89-306

Mr. Chairman and Members of the Committee:

We are pleased to meet with you today to discuss theFederal Government's procurement and utilization of Auto-matic Data Processing (ADP) resources. We believe thatP. L. 89-306, the Brooks Act, has accomplished a greatdeal over the past ten years, but pursuant to your requestwe have concentrated our comments primarily on thoseareas of management of ADP in which further improvementscan be made.

Under this Act, rtajor responsibilities are assignedto executive branch agencies:

-- the Administrator, General Services Administration(GSA), coordinates and provides for the purchase,lease, and maintenance of automatic data processingequipment by Federal agencies;

-- the Secretary of Commerce, working primarily throughthe National Bureau of Standards (NBS), providesscientific and technological advisory services,performs standards work, and does research in thearea; and

-- these activities are subject to direction by thePresident, and to fiscal and policy control by theOffice of Management and Budget (OMB).

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According to GSA statistics there were over 9,000 in-stalled computers in the Federal Government inventory inJanuary of this year and all indications are that the numberof computers will continue to increase, with a correspondingincrease in the Government's investment.

We know that Congress is concerned about the costsof ADP programs. On a number of occasions, we attemptedto determine comprehensive and precise costs for theGovernment's ADP programs but found it impossible withoutan inordinate expenditure of effort and resources due to:

-- the sizeable automatic data processing operationsfinanced by the Government but not required tobe reported to GSA; and

--differences among Federal agencies in recording,summarizing, and reporting on cost data on automaticdata processing activities.

In May of 1975 we developed an estimate of the Govern-ment's automatic data processing for fiscal year 1974. Atthat time, we estimated the total expenditures were in ex-cess of $10 billion annually. We know that costs are con-tinuing to grow and in our opinion consider $10 billionannually to be a conservative estimate.

To get into this subject in more detail, we willstart by outlining results of GAO studies of agency pro-curements of data processing equipment during the pastfew years. These studies point out the problem areasquite clearly.

ACQUISITION OF DATA PROCESSINGEQUIPMENT WITHOUT ADEQUATE--DETERMINATION OF NEEDS

In a number of our reports, we have cited instancesin which data processing equipment was acquired or replacedwithout adequate determinations being made of what the agen-cies' needs were. The result often was that more capacitywas acquired than was needed, and the Government incurredgreater cost than was necessary to do the agencies' work.

These unnecessary acquisitions usually were attributableto:

1. N9t adequately determining the scope of the workthe computer system was to perform.

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2. Failing to make cost/benefit analyses of alterna-tive methods of meeting needs-

3. Not assessing utilization of equipment currentlyin use to see whether additional work could beperformed without acquiring additional capacity.

The cases we have reported in the past few years includethe following.

LACK OF ADEQUATE STUDIEE OF WORKTO BE DONE OR ALTERNATIVES

In our report 1/ on the planning for a Departmental-wide automatic data processing system within the Depaftmentof Agriculture, we stated that the Department had not ade-quately determined requirements in that:

-- the Department-wide needs were primarily developedfrom a workload analysis of only one of its 29agencies and users,

-- the users' locations and communications needs hadnot been identified, and

-- an analysis of the security requirements forsensitive and personal data had not been performed.

Additionally, Agriculture had not made economic studiesfor evaluating the proposed project's benefits or thecost implications of alternative designs.

The total estimated cost for this program, including$106 million for equipment and software, and for operatingcosts over an 8-year period, was $398 million. Our reportrecommended the cancellation of the planned procurement.Subsequently, 2/ Agriculture terminated the procurement.

1/LCD-75-108: Improved Planning--A Must Before ADepartment-wide Automatic Data Processing SystemIs Acquired For The Department of Agriculture,June 3, 1975.

2/October 1975.

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In another case, we reported 1/ that the Social SecurityAdministration leased two systems at an annual rental cost of$2.8 million. These were leased without adequately evaluatingthe need for them or considering the relative costs of alter-native methods of acquiring the desired computer capability.In response to our report, the Social Security Administrationadvised us it would improve its p!ocurement practices.

In another instance, we reported 2/ that the VeteransAdministration leased a computer for three years for about$3.8 million, without determining whether a less costly sys-tem might satisfy their needs.

We suggested that VA restudy this matter and returnthis equipment if it was in fact larger than needed. (Theircontract would permit such a return.) VA officials promisedto make such a study.

We also have found instances in which procurem-its weremade without being preceded by adequate utilization ;tudies,which might establish that additional equipment is not neededor that less costly alternatives are available. Two such in-stances were the Department of Agriculture's proposed procure-ments for its Washington and St. Louis computer centers.

In our report on the Washington Computer Center 3/, westated that Agriculture had not made a study justifying theneed for expansion of its computer storage systems. In Jan-uary 976 we dibcussed our findings with Department officialsand suggested that their request for proposals lee cancelled,which they did. We also suggested an alternative lower costway of satisfying their requirements, which would reducetheir annual rental costs by about $300,000.

1/B-164031(4): Improving the Acquisition of Computer Sys-temP. January 24, 1974.

2/MWD-76-132; Letter report to Congressmen John E. Mossand Charles Rose, House of Representatives;June 1, 1976.

3/LCD-76-120 letter report issued 4/16/76.

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In a current review of the St. Louis Computer Center, 1/we found inefficient use of data processing facilities which,if corrected, would eliminate any present need for additionalequipment and could even result in a reduction in annualoperating costs. We believe that other improvements to theexisting system or use o. commercial facilities, will pre-clude the need for a computer upgrade until it can be co-located with Agriculture's Kansas City Computer Center,planned- for July 1977.

As disclosed in a current report, 2/ three DefenseSupply Agency computer centers have disri drives which makeup a substantial portion of the total hardware costs ofthese systems. We computed the utilization of disk space atthese computer centers, which showed that, of 283 disk driveson line, space equivalent to 83 disk drives, or 30 percent,was not required to support the current levels of operations.Thus, unneeded disk equipment, which represented an invest-ment of $808,000, could be used at other Government activi-ties to avoid new procurements or to replace rented equip-ment.

Also, we found that DSA had a disk drive replacementprogram underway which, if followed as origi ally planned,would have resulted in about 70 percent of the storagespace on the new disk drives not being used. This happenedbecause in arriving at its computation of needs, DSA hadmade no evaluation of the relationship between equipmentperformance and storage capacity, which they subsequentlyagreed to do.

On May 18, 1976, a DSA official told us that the studyhas resulted in VSA taking action to reduce the number ofdisk drives presently installed at one center and the numberof drives to be installed at other centers will also be re-duced. As a result of there actions annual costs under thereplacement program will be reduced by about $497,000 or 38percent.

Our January 1974 report 3/ on acquisition of computersystems by the Social Security Administration (SSA), isanother instance in which we discussed problems arising

1/Report issued 12/30/76.

2/LCD-76-121.

3/B-]64031(4), Improving the Acquisition of Computer Sys-tems, January 24, 1974.

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from the lack of studies required by Executive branchpolicies--studies that are intended to insure that addi-tional ADP resources are obtained only after adequateevaluations of the requirements are made. In that report,we pointed out that the mere deferral of major systemsacquisition through improving existing facilities canalso result in substantial savings. This was demonstratedby SSA's action in March 1973 to defer the proposedleasing of a new IBM 370/165 system for about 3 monthsthrough the modification of an existing system, whichreuulted in a savings of about $543,000.

Inadequate Assessments of Utilization

In August 1975 we reported 1/ that the Federal Avia-tion Administration (FAA) had purchased and installedtwo computer systems at a cost of about $3.1 million tosupport data systems that were being developed. FAA'sjustification was that existing computers could not handlethe expected workload. We found that FAA did not reviewthe workload and that the two computers were not effectivelyused months after installation. For a 6 month period thatutilization amounted to only 7.3 percent.

At the time of the procurement the Office of Managementand Budget (OMB) required a readiness review before acqui-sition to insure that a reasonable amount of productivework could be processed when the computers were installed.FAA did not make such a review.

In a March 1975 report 2/ we discussed opportunitiesfor improving computer use in the Bureau of the Mint.That report discusses Federal regulations which requireagencies to select computers on the basis of detaileddeterminations of an agency's data processing requirementsso that only needed computing capacity is acquired. Beforeselecting the IBM 370/155, however, the Mint did not meetthis requirement for the applications that were to berun on the computer. Nearly a year after installing its

1/LCD-74-118, Improved Planning And Management of Informa-tion Systems Development Needed, Federal Aviation Admin-istration, August 18, 1975.

2/FGMSD-75-19, Opportunities for Improving Computer Use inthe Bureau of the Mint, Department of the Treasury,March 20, 1975.

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computer, the Mint was using only one-third of the system'sproductive capacity. Only one major computer applicationhad been designed and put into service.

We recommended that the Treasury direct the Mint toseek ways to use the excess capacity. In a letter commentingon the recommendation in our reports, the Treasury replystated that:

"the current and planned customs workload willuse a significant portion of this capacity."

After we issue a report, we make routine followupsto see if our recommendations are being implemented.Durina one of these followups, we learned that insteadof diverting more Customs work to the Mint computer, theTreasury permitted Customs to acquire a computer of itsown.

ACQOUSITION OF COMPUTER EQUIPMENTSOONER THAN NECESSARY

A closely related problem is acquiring equipment, inquantity, before adequate software design, testing, anddebugging have been performed. This can lead to substan-tial unnecessary costs.

In a recent report 1/ concerning the Air Force's Ad-vanced Logistics System we stated that the Air Force ac-quired and installed computer systems at all five air logis-tics centers and Headquarters before successful testing andwith the knowledge that there were serious problems withcomputer equipment and software. This occurred even thoughin February 1971 we endorsed a recommendation by an AirForce Scientific Advisory Board panel that no additionalcomputer systems be acquired by the Air Force until the pro-totype system was completely tested and evaluated urnderoperational loads. That endorsement was contained in anearlier report to the Chairman, House Committee on Appro-priations, dated February 4, 1971.

In December 1975, the Congress instructed the AirForce to terminate the Advanced Logistics System after

1/LCD-75-101, Problems in Developing The Advanced LogisticsSystem, dated June 16, 1976.

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9 years of work and the expenditure of about $250 million.The cost to the Government could have been much less if theAir Force had not acquired the hardware prematurely.

POOR DESIGN AND PLANNING

In a number of our reviews, we have found that initialpoor design and planning continues to plague ADP operationsyears later. In 1975 we issued a report 1/ on the Navy'sautomatic data processing. This program is costing about$300 million annually. We found that the Navy has thenecessary guidance for system development but was havingdifficulty achieving its major objectives for such systems,pa:ticularly in developing standard systems on a commandand functional basis. Instead of timely, standardized, andcost-effective systems, there have been costly and prolongedsystems development cycles. This has resulted in the Govern-ment spending millions of dollars each year to sustain systemdevelopment efforts and to operate and maintain computersacquired for those systems without fully achieving expectedbenefits. In addition, it has acquired late-model computersfor some of those systems in an effort to upgrade them, eventhough they are not fully standardize' and are not designedto use the latest computer technology.

We found that a major contributing factor is commandprerogative, which allows local commanders to influenceunduly the design of standard systems, to modify standardsystems, and to develop systems to suit local needs withoutregard to the ADP program objectives. We recommended thatthe commands be required to adhere to the fundamental re-quirentents for systems development and management throughmore stringent control by Navy's top data processing managers.The specific areas where improvements are needed, in bothdevelopment and management, are system studies, redesign ofsystems, justification of system projects, and standardiza-tion.

The Assistant Secretary of the Navy (Financial Manage-ment) acknowledged that improvements could and should be madein the Automatic Data Processing Program and essentiallyagreed with GAO's proposals. In July 1975 he advised us thathe had initiated numerous actions to strengthen the Navy'sdata processing program. These are essentially in consonancewith our recommendations.

l/LCD-74-110, Ways to Improve Management of Automated DataProcessing Resources, Department of the Navy, April 16,1975.

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PRESCRIBED PROCUREMENT PRACTICESNOT FOLLOWED

We have also reported a number of instances in whichprescribed procurement practices were not followed. Theresults of such acticns are not always ascertainable, butthe usual result is additional cost to tLe Governmentfor the items purchased.

The deviations from prescribed procedures disclosedby our reviews are:

1. Agencies avoided cbtaininq G2A delegationsof authority for procurement

2. Failure to obtain competition or make costdeterminations.

3. Sole source procurements authcrized withoutadequate consideration of alternative methodsof meeting needs.

4. Little use of ADP Fund.

Avoidance of GSA Authorityto Delegate-Procarement

In our reviews we found some evidence of avoidanceof obtaining delegations of procurement authority fromGSA. In one report 1/ we disclosed that the Social Secur-ity Administration (USA) ordered only 10 of 64 tape drivesrequired for a new IBM 370/165 system, thus staying withinthe maximum order limitations; and thereby avoiding havingto obtain a procurement delegation from GSA. The other 54tape drives were diverted from other SSA systems. Thesewere supposed to have been returned to IBM and replacedwith drives obtained competitively. GSA had not approvedthe diversion. Also, SSA acquired ;, UNIVAC 1108 system,without obtaining a delegation of authority, by amendinga contract made under an earlier delegation.

In another case, 2/ to acquire three computers theArmy modified an existir contract, without seeking a

l/B-164031(4), Improving The Acquisition Of Computer Sys-tems, January 24, 1974.

2/Comdisco, Inc., 54 Comp. Gen. 196 (1974).

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delegation of procurement authority from GSA. In responseto a bid protest, we found this procurement to be unautho-rized and advised the Army to get such a delegation beforeproceeding with the procurement. The Army eventually pur-chased the remaining systems on the open market and modifiedthe arrangement on the installed systems to reduce signifi-cantly the cost to the Government.

In two cases, 1/ GSA and the procuring agencies in-volved did not justify and review proposed procurements inaccordance with Federal Management Circular 74-5 and FederalProperty Regulation, part 101-32.4, (the detailed proceduresgoverning Government acquisition of computer equipment) eventhough under the proposed procurements contractors couldacquire equipment for the account of the Government. GSA'srationale was that these were not procurements of equipmentbut were procurements of facilities management services.After GAO raised objections with regard to these procedures,GSA reinterpreted its responsibilities so that in the future,it will increase its review role in such procurements.

Failure to Obtain Competitionor-Make Cost Determinations

Mr. Chairman, your Committee has, for a long time, in-sisted upon an environment of full and free competition forFederal procurements of automatic data processing equipment.

Our report on competition, dated May 1974, 2/ disclosedthat, while there has been a decline in recent years ofschedule contract procurements, in fiscal year 1973 (thelatest year for which !eports were available at the time)it was still 60 percsnz of the total for automatic dataprocessing equipment contract costs.

Federal Properkcy Management Regulations require thatagencies seek competition before acquiring equipment underschedule contracts, except when a determination of lowestoverall cost to the Government, price and other factors

l/RED-76-59, Contract Award by the Federal Power Commissionfor Developing and Installing a Regulatory InformationSystem, April 2, 1976, and PRC Computer Center, Inc.,55 Comp. Gen. 60 (1975).

2/B-115369, More Competition Needed in the Federal Procure-ment of Automatic Data Processing Equipment, May 7, 1974.

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considered, can be made and documented without further so-licitation or negotiation. GAO identified and describedinstances where agencies competitively acquired equipment.In so doing, they effected substantial savings to the Go -ernment, as much as 65 percent of the schedule contractprice. In many instances, however, agencies ordered fromschedule contracts without either seeking competition ormaking the requisite cost determinations. In such cases,there is no assurance that the equipment was acquired atthe lowest cost. One of the problems at the time was thatthe maximum order limitations--those quantities or amountsthat an agency cannot exceed without a delegation of author-ity from GSA--did not apply to installed, leased equipment.Thus, any cost reductions that the use of such limitationscould provide were not obtained for a major portion of an-nual equipment expenditures, and savings, which could be inthe hundreds of millions of dollars over the lives of thosesystems, were being lost. We recommended that the Adminis-trator of General Services: (.) extend the use of maximumorder limitations to contrects for the renewal of leases orpurchases of installed, leased equipment, (2) remind agenciesof the Federal Property Management Regulation Requirement toobtain full and complete competition in all ADP equipmentacquisitions, and (3) emphasize to Federal agencies thesignificant savings resulting from competition in the acquis-ition of ADP equipment. The Administrator took the recom-mended actions. 1/ GAO has not yet conducted a follow-upreview to see how much the procurement process has improved,but we plan to do so.

Questionable Sole Source Procurements

Another procurement area that has caused concern aresole source procurements. Justifications of sole source orrestrictive specification procurements on the basis ofemergency needs have been numerous. We have found instanceswhere such procurements nave been initiated without adequateconsideration of alternate resources. Por example, a fewyears ago we reported 2/ this situation on the leasing ofcomputers for automati..g communications, message processingand information-handling processes in the Executive Officeof the President, Office of Management and Budget (OMB),National Security Council and Domestic Council.

1/FPMR Temporary Regulation E-39, June 24, 1975 (SupersededE-32, June 28, 1974).

2/ B-174830; Letter report to the Chairman, Joint EconomicCommittee; September 7, '972,

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Three computers 1/ were leased under schedule contractswith the manufacturers, at an annual rental of $1,371,000,after OMD waived its prescribed procedures 2/ for competi-tively selecting computers. Thus, other vendors ware notoffered an opportunity to compete. Plans were to lease afourth computer 3/ in a similar manner.

Inquiry was made into the justification for sole-sourceacquisition of one 4/ of the three leased computers. Theprimary justification was the need to install the system bya specified date to insure the processing of the President'snext budget. In our opinion, this justification was ques-tionable because OMB could have used computer resources ofother agencies or commercial firms, as it had for priorbudgets.

Another instance 5/ involves the leasing of a specificbrand computer on an interim basis. The Agriculture Depart-ment considered this an emergency action due to its cancel-Jation of a Department wide computer procurement and itsincreasing workload. However, the Department had nut ade-quately considered other alternatives, such as using commer-cial services and making various improvements in existingsystems.

Use of ADP Fund

In an October 1975 report, 6/ we found that additionalsavings could be realized by fulT implementation of th.Brooks Act as intended by the Congress. The legislative

i/Two RCA 7 0/45s and one IBM 370/155.

2/OMB Circular A-54 (superceded by Federal Management Cir-cular 74-5).

3/One IBM 370/145.

4/IBM 370/155.

5/ACD-76-126, New Computer Not Needed for th. St. LouisComputer Center, Department of Agriculture, DRAFT.

6/LCD-74-115, Further Actions Needed to Centralize Procure-ment of Automatic Data Processing Equipment to Complywith Objectives of Public Law 89-306, October 1, 1975.

15

history of tia. Act indicates an intention that GSA eventuallybecome the single purchaser of data processing equipment forthe Government. GSA would delegate its procurement authorityto the using agencies only in exceptional circumstances.Also, the revolving fund, specially createu by the Brooks Actto facilitate the financing of the acquisition of automaticdata processing equipment by the Government, should eventu-ally be fully utilized for such purchases and leases andoperation of Federal computer centers. Although 10 yearshave passed, neither of these objectives has been achieved.Over 80 percent of the 1974 data processing procurementswere made by the using agencies rathier than by GSA. Only 1percent of the procurement utilized the revolving fund.

GAO found that the full implementation of the originalintent of the Brooks Act had been hampered because OMB:(1) neither approved nor disapproved GSA's plans for fullcapitalization of the ADP fund; (2) denied GSA's requestsfor resources to carry but its functions; and (3) Lacedlimitations on capital expenditures out of the UDP fund.

We found that significant savings, indicated to bein the hundreds of millions of dollars, could be realizedif GSA were allowed to achieve this "single purchaser"status and the Fund were adequately capitalized. Acqui-sitions of automatic data processing equipment could thenbe more efficient and economical since GSA: (1) would havea greater ability to make volume purchases (and take advan-tage of accompanying discounts); (2) csuld better utilizethe information it has collected regarding the Government'sADP resources, e.g., by having the knowledge and ability tomake "opportunity (lease-purchase) buys" of automatic dataprocessing equipment; (3) would be in a position to influencebuy vs. lease decisions; and (4) could better promote a com-petitive environment in Federal ADP procurements.

On the basis of our reviews of numerous agency procure-ments, it is our view that a strong central procurement cap-ability s',ould be maintained to insure that the Government'sinterests are protected--that, generally, the high level ofexpertise that is necessary should reside in a central agency,with the requisite authorities. GAO recommended that Con-gress require the Director of OMB and the Administrator ofGeneral Services to (1) prepare end submit a Financial planto accomplish the major objectives of Public Aaw 89-306(including alternative ways of capitalizing the automaticdata processing fund), and (2) advise the Congress periodi-cally of progress or problems in accomplishing the plan.

16

PROBLEMS IN ACQUISITIONS OF COMPUTERSUNDER FEDERAL GRANT PROGRAMS

These same types of problems also affect Federal grantprograms. Federal policies and legislation have approvedand encouraged using automatic data processing in grantprograms. During the last several years, grant funds spentfor developing, acquiring, and operating ADP systems haveincreased. The amount of Federal expenditures is unknown;however, we know that the amount is large and increasing.

In our recent report 1/ on opportunity for savings oflarge sums in acquiring computers systems under Federalgrant programs, we noted that grantees were allowed to:

-- Obtain new computer systems or add to existingsystems without thoroughly evaluating their needs.Better evaluations would show, for example, if moreefficient use of existing computers could make itpossible to do the work planned without a newcomputer.

--Obtain their own computer systems without fullyexploring opportunities for joint use of existingcomputer facilities.

-- Lease equipment for short periods without fullyconsidering the savings from purchasing or long-term leasing.

--Exclude certain sources of equipment supply, eventhough price reductions can normally be obtainedfrom these sources.

In summary, oe concluded that OMB, GSA, and Federalgrantor agencies should work together to establish con-sistent guidelines so that grantees obtain necessary auto-matic data processing equipment economically. Grantor agen-cies should adopt procedures to insure grantee compliancewith these guidelines.

1/FGMSD-75-34, Opportunity for Savings of Large Sums inAcquiring Computers Systems Under Federal Grant Pro-grams, July 24, 1975.

17

In this report, we recommended several specific proce-dures that would strengthen Federal policies to Insure thatgrantee agencies follow business-like practices when acquir-ing future computer equipment. We plan to start follow-upwork in the area during fiscal year 1977.

IMPROVING ADP OPERATIONS

GAO has also looked into methods for reducing theoperating costs of automatic data processing installations.After a review of 43 computer installations in industryand Government, GAO issued a report to the Ccngress. 1/The report describes methods which some companies and-agencies used to improve computer operations in six majorcategories.

1. Making sure computer products are needed andproperly designed.

2. Increasing efficiency of applicatior programs.

3. Increasing efficiency of operating systemsoftware.

4. Improving operations of computer systems.

5. Improving scheduling of computer systems.

6. Improving productivity of computer hardwar~e.

We found that use of these methods saved lar,,ie amountsof money in places where they were used. However thesemethods were either not known or not used in nio.. of theGovernment's data processing operations. We found thatFederal agencies needed further and more specific guidanceon how to maximize the efficiency of these resources. Westated that OMB, GSA, and the National Bureau of Standards(NBS) should provide strong leadership ij this area.

Subsequently, GSA reported to GAO that it issued Fed-eral Management Circular 74-5, dated July 24, 1974, requiringthat as a prior condition to initiating a now procurement ac-tion, the agency must establish that:

1/B-115369, Tools and Techniques for Improving the Efficiencyof Federal Automatic Data Processing Operations, June 3,197*.

18

-- the functions or processes for which the c.mputeris to be used are essential and readily adaptableto automation,

--workload and data processing requirements wererevalidated,

-- consideration had been given to upgrading theexisting installations,

--nonmission-type work was eliminated, and

-- proposed new systems had beeii designed for effective-ness and operational economy.

GSA has proposed requiring a certification of eval-uation and improvement of existing systems to be providedwith the submitting of a new system procurement request.To the best of our knowledge, this certification require-ment has not been issued in either the applicable FederalProcurement Regulation or Federal Property ManagementRegulations.

While these actions indicated activity and progress,some major procurements have come to our attention in whichGSA's requirements and guidance were not complied with, orwere not adequate. For example, four additional major com-puter systems are being acquired by Social Security Adminis-tration to augment or replace computers which we think arebeing substantially underutilized even on the busiest daysof a 2-year period.

PROCUREMENT SYSTEM FOR MINICOMPUTERSIS TOO COMPLICATED

Another problem often raised by agency personnel isthe aspect of red tape involved in preparing for a procure-ment of automatic data processing equipment. This arosein our minicomputer study. 1/

Agency personnel told us that intolerable procurementdelays were resulting from their own internal documentationrequirements as well as from GSA's documentation require-ments. Most of these requirements were developed before

1/FGMSD-75-53, Uses of Minicomputers in the Federal Govern-ment: Trends, Benefits, and Problems, April 22, 1976.

19

minicomputers appeared on the scene. In a survey of 149installations, 39 percent said they experienced unreasonabledelays in acquiring and/or implementing the minicomputers.We recommended that GSA simplify procurement requirementsfor minicomputers with low-aggregate-dollar value, and GSAagreed.

MULTIYEAR LEASES

On the basis of a review of automatic data processingequipment installed under short-term leases, we reported 1/in 1971 that the Government was spending amounts substan-tially greater than it would under firm-term multiyearleases. We concluded that the use of multiyear leases hadbecome essential if the Government is to make maximum useof the limited funds for acquiring ADP equipment.

We reccmmended, therefore, that the Congress considerlegislation authorizing the GSA, through the ADP Fund,to contract on a multiyear basis without the necessityof obligati3 the total anticipaced payments at the timeof entering z. o the leases.

In the 93rd Congress Senate bill S. 2785 was intro-duced to provide the authority GAO recommended, but itwas not passed.

S. 1260 was introduced in the 94th Congress with thesat e language as the previous bill; it was passed by theSenate and referred to the House Committee on GovernmentOperations for consideration. In September 1975, wereported to the Chairman that we favored enactment of thatbill. We think that congressional control can be retainedsince the bill provides that the unfunded portion of theGovernment's obligation under the multiyear leases snallnot exceed the amount specified in the annual appropriationact.

In the absence of the kind of authority recommended,GSA recently proposed a plan to implement multiyear leasingunder various arrangements which do not require obligatingfunds for more than one year at a time. In April 1976, theComptroller Generai gave tentative and conditional approval

1/B-115369, Multiyear Leasing and Government-wide Purchasingof Automatic Data Processing Equipment Should Result inSignificant Savings, April 30, 1971.

20

to "Third Party Leasetback" arrangements. 1/ Conditions were

that GSA should continue to seek adequate-capitalization for

its automatic data processing fund to finance purchases; eachproposed leaseback should be approved by GSA (no blanketdelegation to agencies should be made), and lease or purchase

determinations should be made and documented before lease-backs are used. Also, we said these procedures should beinstituted on a trial basis because of problems which may

arise.

ACQUIRING EQUIPMENT FROM ALTERNATESOURCES OF SUPPLY

A computer system is made up of a combination of various

pieces of electronic and other types of equipment designed tofunction as a whole. Generally, each individual component is

not functional until it is joined to other components, and

the proper software is on hand to make the equipment perform.

Before 1970, both the Federal Government and privateindustry generally relied on computer system manufacturersto assemble a series of components or "peripherals" into

a workable system, even though the components may have beenmade by several different manufacturers. Computer systemmanufacturers perform the necessary interfaces and connectingoperations and develop the operating system software.

The price cf computer equipment obtained fron a systemmanufacturer necessarily includes the cost of many of the

services described above. On the other hL.nd, some indepen-

dent manufacturers of components do not normally providethese services, specializing instead in the marketing of a

particular component or group of components at lower prices.

In selecting a computer, one cannot simply select com-

ponents or peripherals from various manufacturers with the

assurance that, when all this equipment is put together, it

will operate as a system. Electronic interfaces may be

needed or additional software may be reauired. Although the

concept of purchasing components from various manufacturersis a complex one, it is generally recognized in the industrythat, by so doing, the sophisticated user can obtain the best

available equipment for a particular application and savelarge sums.

1/B-115369, April 23, 1976.

21

GAO Report on Peripherals

In a 1969 report, 1/ we stated that Federal agenciescan achieve large savings through the use of more economicalsources of supply for peripheral equipment and components.

The report identified:

-- Selected peripherals which were directly inter-changeable (plug-to-plug compatible) with certainsystems manufacturers' peripherals which, ifreplaced by lower cost peripherals, could saveFederal agencies about $28 million annually.

-- Other non-plug-to-plug components which couldreplace similar system components which wouldsave Federal agencies about $100 million. How-ever, before such savings could be realized,standards must be developed to solve interfaceproblems.

-- Additional savings in rental cost were noted byusing third-party leasing companies.

In July 1970, the Joint Economic Committee heldhearings on this subject. We reported that slow progresswas being made by the computer industry ,n development ofinterface standards to solve the problems identified inthe 1969 GAO report. We suggested that if an industry-wide standard cannot be established, then NBS should bedirected to develop a Federal standard interface program.

In March pi73, NBS prepared a report entitled, "Meansof Achieving Interchangeability on Computer Peripherals."The findings and recommendations in that report calledfor development of interface standards along with othersuggestions for improvement in the peripheral area.

Bureau officials told us that the Bureau had notdeveloped an input and output interface standard becauseit lacked the necessary funds to do the job. Emphasison solving the standard interface problem was increasedearly in January 1975 when NBS received additional fundsto help develop interface standards.

1/B-115369, Acquisition of Peripheral Equipment for Usewith ADP Systems, June 24, 1969.

22

Progress in the development of interface standardsfor non-plug-to-plug components nas been slow while manymillions of doliars have been saved in the plug-to-plugcompatible area. Over six years have passed withoutdevelopment of an input and output interface standardfor ADP components, which is where large savings potentialis known to exist.

SOFTWARE REQUIREMENTS AND SHARINGCPPORTUNITIES NOT FULLY EVALUATED

Since passage of the Brooks Act of 1965, many changesin the marketing of computer software have taken place.The Federal Government has not had a centrally guided orunified approach for dealing with these changes. By theearly 70's, Federal agencies were spending over $2 billiona year on computer software and experts believe that todaysuch expenditures exceed $5 billion yearly. The complexi-ties of programing and related problems have increased costsin recent years to the point that software has surpassed thecost of computer equipment.

During our study of the acquisition and use of softwarefor Federal computer systems; 1/ we found that Federal agen-cies generally did not have a coordinated approach on acquir-ing and developing software products. We found that theFederal Government:

--developed similar software at M..any agencies to performthe same function,

-- procured computer programs that were already availablewithin the Federal Government,

--bought software with restrictive limitations for use,

--ccntracted for like software at varying prices withina kelatively short time period,

-- used widely varying criteria for purchase, selection,and evaluation of software which resulted in buyingmany variations of the same product, and

1/B-115369, Acquisition and Use of Software Products for Auto-matic Data Processing Systems in the Federal Government,June 30, 1971.

23

-- deprived the Government of the opportunity tobenefit from bulk procurements.

These acquisition practices were fo- lowed by Federalagencies because of limited activity by central managementagencies of the Government in providing policy guidancefor acquiring and utilizing computer software. Amongother things, we noted in our report a need for:

-- More positive central guidance and more effectiveprocurement regulations specifically directed tosoftware acquisitions.

--A catalog, inventory, or central reference index ofcomputer programs that have been developed, tested,or in use by the Government.

--Software standards which would promote greaterinterchangeability of computer programs amongFederal data processing installations.

-- Better quality of software documentation which wouldfacilitate reuse of computer programs.

Our 1971 report suggested that GSA should make use ofthe revolving fund (set up by the Brooks Act) to acquiregeneralized software for Government-wide use. Othersuggestions to GSA included: (1) bulk buying of generallyused software, (2) using formally advertised procurementcontracts, (3) striving to obtain nonrestrictive or license-free contractual arrangements for software with rentals basedon use, (4) considering the outright purchase of softwareproducts that would be widely used throughout the Government,and (5) maintaining an inventory of generally used computersoftware for sharing purposes.

We recommended that the Government establish and maintaina reference index of computer programs, make detailed technicalevaluations of all programs intended for use by the Governmentand promulgate Federal standards for computer languages andprogram documentation.

Action Taken by Central ManagementAgencies on GAO's Software Filding's

Little overall progress has been made in this area duringthe past five years on the problems identified in our 1971 re-port on software. However, in February 1976, GSA set up aFederal Software Exchange Program. Under this program, agen-cies will be required to report to GSA commonly used software

24

developed within the past three years. After the data is re-ported, GSA plans to provide a software catalog to all agen-cies for selecting software programs to meet their needs.Agencies will be required to screen existing Federal softwareresources before they procure software from commercialsources.

Also under development is a Federal guide to help Fed-eral managers make better software buys. NBS officials toldus that this guide would help managers in buying softwareproducts--in terms of better specifications, cost-estimatingmethods, technical review steps, and quality assurance re-quirements--to get dependable, on-schedule products in to-day's software marketplace at the best price to the Govern-ment.

Better Documentation is Neededto Improve Software SharlalgOpportunities

Preparing readable documents and records is very impor-tant for sharing of ADP software. Usually, it is the onlyvisible means of communicating both the essential elementsof the system and the logic followed by a computer program.

As used in the ADP field, the term "documentation" re-fers to the information recorded during the design, develop-ment, and maintenance of computer applications to explainpertinent aspects of a data processing system--inc].udingpurposes, methods, logic relationships, capabilities, andlimitations.

During the past decade, GAO has issued both Government-wide and agency-wide reports pointing out the many problemsinvolved in documenting ADP systems. Our reports showedthat inadequate documentation has:

-- limited the potential for sharing computer systems,programs, and mathematical models;

--increased the cost of Federal operations;

--weakened management controls in some systems; and

-- contributed to loss of funds and assets.

Typical problems cited in the GAO reports are:

25

--An entire ADP system involving several programs hadto be redesigned when minor modifications couldhave achieved the same results, had adequate docu-mentation been available. The difference in timerequired to redesign the system instead of modifyingit was about six staff months.

-- Inadequate documentation was cited as the reason fornot sharing hundreds of general-use computerizedmodels for which the Federal Govern.nent had paiddevelopment costs.

Generally, our studies reported that good documentationprevents waste and unnecessary costs in many ways--by makingprogram modifications feasible, by making redesigns easier,by making internal controls work better, by facilitatingthe work of auditors, and in a host of other ways, includingmaking programs usable by others.

We recommended in 1974 1/ that GSA issue guidance toagencies in this area when N§S standards became available.

In February 1976, NBS issued Guidelines for Documenta-tion of Computer Programs and Automated Data Systems. Theseguidelines are intended to provide a basis for determiningthe extent of documentation that is needed for Federalcomputer programs and automated data systems.

While some work has been started on solving some ofthe problems in the software area, we have not observedmuch software sharing among Federal agencies, in this, thelargest ADP expenditure area.

It has been widely recognized, and our past studieshave shown, that large benefits can be obtained by sharingcomputer systems. p=ograms, models, etc. However, beforelarge savings in the sharing of software resources can beaccomplished, four important steps must be placed intooperation. They are:

1. An inventory of existing software programs mustbe prepared to identify programs that are currentlyavailable for sharinq purposes.

1/B-115369, Improvement Needed in Documenting ComputerSystems, October 8, 1974.

26

2. When computer programs are developed, they must bedesigned with sharing in mind, i.e., the computer programmust be universal in design in order to meet varied possibleusers' requirements and in accordance with Federal process-ing standards.

3. They must be properly documented in order thatpossible users can acquire shared programs with a minimumamount of technical support.

4. An enforcement mechanism must be created.

We are currently involved in a follow-up study onsoftware sharing problems.

MORE STANDARDIZATION OF DATA ELEMENTSND CODES WILL HELP RMPDUCE HIG COSTS

Although Federal agencies need current and accurateinformation, collecting raw data and converting it intomachine-readable form is expensive and time consuming whendone manually. A few years ago, the National Archives andRecords Service of GSA had estimated the cost of Federaldata collection activities to exceed $5 billion annually.Today, it is many billions more.

Data is sometimes transferred by automatic meansbetween Federal computer systems. However, more data canbe transferred automatically if originally collected andrecorded in a standardized, agreed-upon fashion.

When more than one agency needs the same data, thatwhich is already collected and recorded in one Federalcomputer system can be transferred to another, eliminatingthe need to duplicate the collection and conversion process.Once the data has been converted to machine-readable form bythe original collector, this data can be exchanged auto-matically in the form of magnetic tapes, punched cards,disks, and so on. Such exchanges are especially desirablewhen data can be put directly inLo another computer-basedata system.

Federal Standards Program

Since 1965 the Federal Government has had a FederalStandards Program. The Objectives of this program are toachieve the greatest practicable degree of uniformity ofinformation used among and within Federal data systems.

27

Prior to 1973, the Office of Management and Budget retained

responsibility for supporting the development and use of

standards for data common to the executive department.

Fxecutive Order 11717, dated May 9, 1973, transferred

to the Secretary of Commerce all OMB functions related to

establishing Government-wide standards for automatic data

processing systems, including approving standards on

behalf of the President. In effect, this order transfersoverall leadership for standardizing data elements and

codes to Commerce.

GAO Reports on Standards

In a report 1/ on this subject, we pointed out that

the Federal program in this area has been slow and not

very successful. Only a few Federal general standards

have been issued since 1965, and many agencies do not use

some of the standards developed.

Also, we notea .hat although some agencies have

developed and adopted standards, the overall effort has

been hampered by major obstacles in policy direction,

approach, and guidelines. Our report also stated that

GAO did not foresee a significant amount of automated

exchange taking place until the Government standardizes

data elements and codes and incorporates them into its

computer systems as they are designed or redesigned.

We pointed out that policy determinations are needed

on:

-- A uniform approach and coordination betweendepartments.

--An across-the-board incorporation of approved

Government-wide standards at the most economicaltime.

-- The right of a standardization leader to initiate

standards work with other Federal agencies.

Th! increasing need in Government for information,

coupled with expanding Federal programs and operations,

has highlighted the need for standardization.

1/B-115369, Emphasis Needed in Government's Efforts

to Standardize Data Elements and Codes for Computer

Systenms, May 16, 1974.

28

Automated techniques should be used more to exchangedata and information collected by agenicies where muchsharing is appropriate. Data collected and converted tomachine-readable form by one agency should be made availableto others having a valid need for it.

We are currently studying NBS' standardization efforts,and we will report our findings to the Congress at a laterdate.

SUMMATION

Our testimony today has concentrated on results ofreviews we have made during the past few years. In thesereviews we made specific recommendations for changes orimprovements. Some of these call for action by the cen-tral agencies and some can be accomplished by the operatingagency concerned. During the testimony we also touchedon some areas where your committee may wish to make furtherinquiries. We particularly believe that action to makepossible multiyear leases and to increase usage of tneAutomatic Data Processing Fund would be of great value inreducing the Government's data processing costs.

Mr. Chairman, this concludes my prepared statement;we will be pleased to answer any questions or furnishadditional information.

29

UNITED STATES GENERAL ACOUNTING OFFICEWashington, D.C. 20548

DatedSeptember 28, 1976

STATEMENT OFDonald L. Scantlebury

DirectorFinancial and General Management Studies Division

Prepared for theSenate Committee on Government Operations

onIssues Related to the Use of Computersin the Administration of Federal Programs

Mr. Chairman and Members of the Committee:

We are pleased to present information on our recentlyissued reports to the Congress calling attention to the needfor protection against the many types of threats and con-ditions that can cause catastrophic losses to Federal com-puter systems. Each of these reports deals with a differentfacet of the subject, but all three are concerned with whatwe consider to be serious problems in providing properprotection to computer assets, valuable data, and automaticactions at reasonable costs.

The three reports were:

--Comrputer-Related Crimes in Federal Programs(FGMSD-76-27, April 27, 1976).

-- Managers Need to Provide Better Protection forFederal Automatic Data Processing Facilities(FGMSD-76-40, May 10, 1976).

-- Improvements Needed in Managing AutomatedDecisionmaking by Computers Throughout theFederal Government (FGMSD-76-5, April 23, 1976).

Before discussing these reports, it may be helpful totake a few minutes to discuss what a computer is, and wherecompu' rs are used in Federal programs. My purpose is toshow tnat computer systems have become an integral part ofthe Government process by performing many of the operationsand applications that, in the past, were not done at all orwere done manually. Some agencies would find it impractical,if not impossible, to accomplish their missions withoutcomputers.

30

INCREASES IN FEDERAL ACTIVTTIES

In 1950 the Federal Government had 2 computers, 2 millioncivilian employees and a $40 billion budget. From that timeto date we have witnessed huge increases in social programs,Government services, and computer systems. The cost of thisincreased service and workload is shown in the Federal budgetwhich, for 1977, amounts to about $400 billion. In a littleless than three decades, the budget has increased tenfold.Strikingly absent, however, is a corresponding increase inpersonnel. The full-time civilian workforce for 1977 isbudgeted at less than 2.5 million--only a 25 percent increaseover 1950. However, it is expected that the workforce willuse about 10,000 computers to help them run the Government,a 5,000-fold increase over 1950.

This is a very simple comparison I'm making, Mr. Chairman.Obviously I'm not saying that computers alone have kept theworkforce more constant than the budget, but they have had asignificant impact.

WHAT IS A COMPUTER?

In its simplest terms, a computer is nothing more than afast calculator. Its functions have been succinctly definedas INPUT-PROCESS-OUTPUT.

The INPUT is the process of amassing the raw data andpreparing it for acceptance by the machine. This process isvery personnel-oriented. Data comes from sundry sourcesand in various media. The preparation consists of convertingthe human intelligible data into machine-readable coded data.

The PROCESS is the manipulation of the data accordingto a set of pre-established instructions already imbeddedin the machine. Alterations to these instructions willobviously alter the results.

The OUTPUT is the resulting intelligence from theprocessing of the raw data.

In the early use of computers, data was inserted in thecomputer, processed and a report was generated. Changinginstructions was difficult. Technology has made greatstrides in improving the PROCESS part of the operation.Computers are much faster, smaller, and more economical.The introduction of financially viable mass storage hasfostered the development of data banks wherein huge amountsof data can be concentrated in a readily accessible media.The development of English-like languages to write instruc-tions for the computer simplified the process and put com-puters within the reach of more people and organizations.

31

Advances in communications and teleprocessing are putting

the computer at the fingertips of all kinds of potential

users--legitimate and otherwise. Today all one needs is

access to a terminal and a telephone line.

CONGRESSIONAL INTEREST IN COMPUTERS

Since computer systems are very costly and since they

have become i,separable from the Federal programs, there is

and has been continuing congressional interest in the trend

of development and use of these systems for Federal programs.

GAO has responded to this interest and since the early

1951's has issued numerous reports detailing the need for

better management of data processing activities. These

repo.ts have dealt with the acquisition, procurement, manage-

ment and use of these systems.

ID the early 1950's the House Appropriations Committee

requested us to study and report back on the development and

use of punch card equipment. In the latter part of 1950 and

early 1960 the House Post Office and Civil Service Committee

was interested in the effects of computer systems on Federal

employment. The House Government Operations Committee during

the past 15 years held many hearings on the acquisition and use

of computer systems by Government agencies. The enactment

of Public Law 89-306 resulted from these hearings. The Joint

Economic Committee was interested in economy in the Govern-

ment procurement of data processing equipment in the early

1970's. Also, many other Senate and House Appropriation

Committees and Subcommittees have held hearings which have

f;equently dealt with the most efficient and effective way

to acquire and use computer systems. Recently, the right to

privacy has been the subject of many congressional hearings

and legislation, and in 1976 the Senate Government Operations

Committee began studying computer crimes and security.

COMPUTER USE IN FEDERAL PROGRAMS

The Federal Government is the largest user of computers

in the world. We esti..d:e the Federal Government's annual

cost in computer systems is over $10 billion. However, this

cost represents only a small part of the total value of

these systems to the Federal Government. To help place bur

reliance on computers in proper perspective, I have included,

as Attachment I of my statement, a chronology of major

computer usage in Federal programs. You will see that year

after year more programs and functions were computerized.

From a modest start of two computers in 1950 we have now

grown to an inventory of 9,500 in June 1976. To highlight

32

their importance, the National Aeronautics and Space Adminis-tration could not carry forth its space programs and the Fed-eral Aviation Administration could not control aircraft ef-fectively without computer assistance. Many computer systemsare used by the Social Security Administration to createchecks for Social Security payments of over $84 billion annu-ally. The Internal Revenue Service also uses computer sys-tems to process about 125 million income tax returns eachyear. The agencies mentioned here, NASA, FAA, Social Secur-ity, and IRS--arp only examples of agencies that are verydependent on computers to carry out their programs. Thereare many others that could continue to function but only atreduced levels of efficiency and effectiveness if computerswere not used.

WHY DO COMPUTER SYSTEMS NEED PROTECTION?

Of more importance than the concern over the cost ofa computer facility is the value of the information and/orcontents of computer systems. Because of the nature ofcomputer technology as well as the tremendous capabilitiesof computers, agencies have tended to centralize theircomputer operations in just a few major computer centers.This centralization increases the potential for major thefts,frauds, misuses, or catastrophic losses. Let's consider thepossibility of:

-- Large amounts of government funds being paid out forfraudulent claims;

--Valuable information being stolen for monetary gain;

--Information or records being destroyed, altered, ormisused; and

-- Harm being done to individuals by improper use ofpersonal information collected and maintained.

WHAT ARE THE THREATS-TO COMPUTER SYSTEMS?

Each Government computer center is usually unique.The threats the center faces usually relate directly to itspurpose and use, location, workforce, physical facilities,and so forth. FurThermore, the relative risks of a centercan change over time beca'use of changes in Government poli-cies, laws, conditions, or even changes in the environmentor physical situations. Such changes might be due, forexample, to war, changes in the attitude of the Americanpeople, or economic conditions of the country. In any event

33

changes in Government policy or even the environment of theland and its people can change the posture of a Governmentcomputer installation which could increase or decrease thethreat against it.

We found that computer facilities must be proi ectedagainst both natural threats (flood, earthquakes, windstorms,etc.) as well as hostile threats (fire, theft, bombings,etc.). Such threats include destruction by environmentalforces as well as theft or destruction by individuals. There-fore, in order to have safe and reliable protection overcomputer systems at reasonable cost, it is necessary to havea good security program for protection against accidental orintentional destruction, and disclosure or modification ofthe data on these systems. In a computerized system wherefunds are disbursed and large quantities of data are centrallyaccumulated, stored, and integrated with communication facil-ities, appropriate administrative, technical and physicalsafeguards are more necessary than in a manual system.

WAYS TO HANDLE THREATS

Providing total protection against all possible threatscould require unlimited funds or resources. However, thereare ways and approaches available to help management securecomputer systems at reasonable costs. One approach advocatedby experts involves a concept of risk management which:

-- Analyzes the risks involved,

--Summarizes risk findings for management use,-- Involves high level management in the decision-making process,

-- Implements the most cost effective securitypractices to control unacceptable risks, and-- Reevaluates periodically the potential impacts ofthreats to assess values and mission accomplishmentsand decides on new or existing practices to handlethe risks.

WHAT DID GAO FIND?

In our three reports we pointed out that Governmentcomputer systems and their applications and data were notbeing properly protected because many installations lacked

34

impo:tant security and control measures and/or recoveryprocedures for continuity of operation.

Some effects that have occurred because computer systems

were not properly protected include:

-- Dollar losses;

-- Building, equipment, software, and data losses;

-- Personnel injuries; and

--A loss of life.

Some of these losses were minimal, while others werecatastrophic.

For your convenience, we have categorized our findingsinto the following broad fields.

Category l1-Criminal actions

This category includes such actions as crimes, espionage,mischief, sabotage, etc. Our report on computer crimes(FGMSD-76-27) addresses these illegal or unwanted acts.

Category 2--Inadequate physical security protection

Computerization tends to centralize Government assetsand data, making them more vulnerable to destruction or altera-

tions than ever before. We found a number of conditions atGovernment installations visited which led us to believe that

physical security was not adequate and that action should betaken to protect against possible losses caused by fire, flood,fraud, theft, embezzlement and human errors. Our May 10, 1976,

report on physical security (FGMSD-76-40) addresses this problem.

Category 3--Inadequate controls over automated transactions

Computers in the Government annually issue unreviewedpayments and other actions involving billions of dollars inGovernment funds. These actions are sometimes wrong and,

if not caught, can cost the taxpayers huge sums of money.Our April 23, 1976, report on automatic decisionmaking(FGMSD-76-5) covers this activity.

COMPUTER-RELATED CRIMES

Now, I will discuss some of the details of our threereports, starting with the computer-related crimes report.

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We worked under a handicap in obtaining this informationbecause Fediral agency records do not classify computercrimes as a separate category. With some digging, however,we learned of 69 cases involving the Federal Government.We examined the cases to see if there were common patternsof criminal activity that might suggest means to bettersafeguard against it. We found that these crimes fell intofour major classes. They are:

1. Introduction of fraudulent records into the com-puter system.

2. Unauthorized use of facilities.

3. Alteration or destruction of information or files.

4. Stealing checks, data, or information.

The most frequent type of crime concerned introducing f!:aud-ulent records into the system. There have been many casesdiscovered to date in which people have prepared fraudulentinputs to Government computer systems which resulted indirect payments to individuals who were not entitled to them.These cases include fraudulent payroll, social welfare, taxrefunds, and compensation transactions as well as paymentsfor nonexistent goods and services.

One case in our study involved a system user of a Fed-eral social benefit program. He was able to introduce a ser-ies of fraudulent accounts into the computer system. Thiscaused benefit payments to be paid to co-conspirators whowere not entitled to them. Although the perpetrator con-ducted his illegal activity over a period of 2-1/2 years, theconfirmed loss was only about $3,680. However, in a similarcase on the West Coast, losses were estimated at one-quarterof a million dollars. Losses in subsequent cases where simi-lar methods were used are estimated by program officials torun as high as $1 million in one metropolitan area alone.Of course the figures I have cited relate only to cases dis-covered. No one knows how many millions of dollars haveactually been lost as a result of fraudulent claims to Gov-ernment systems.

Another case noted during our study involved theft ofGovernment funds at Kelly Air Force Base, San Antonio, Texas.The Government paid about $100,000 to bogus fuel companiesfor aircraft fuel never delivered to the Air Force. Thesecompanies were established by a dishonest Government employeeworking at the air base who had indepth knowledge of thecomputerized fuel accounting system which he helped to develop

36

and install. An investigation was initiated when a bankcontacted the Air Force regarding suspicious banking trans-

actions involving Government checks. The employee was laterarrested and sentenced to 10 years in jail for theft ofGovernment funds.

In the cases we reviewed, controls--both automated andmanual--should have been in place and working to minimize the

possibility of criminal activity, but either they were notthere to oegin with or, if they had been provided, they werenot functioning correctly. In our opinion, management has aspecific responsibility to see that the assets and funds forwhich they are accountable are protected through a propersystem of controls, and in these cases failed to provide them.This concept is not new; it is a basic tenet of managementand is set forth in numerous authoritative documents. Manage-ment can meet these responsibilities by having:

-- An organizational plan that segregates the dutiesof individuals to minimize their opportunity tomisuse or misappropriate the entity's resources;

--A system of authorization and record proceduresadequate to provide effective accounting controlover assets, liabilities, revenues, and expenses;

-- An established system of practices to be followedfor each duty and function the organizationperforms; and

-- An effective system of internal review. Thisinclides an internal audit staff that has train-ing adequate to review and evaluate computer-based system controls and makes such reviewsboth when the systems are being designed and afterthey have become operational.

We believe the guidance on internal controls, internalaudit, and accounting methods provided in GAO's Policy andProcedures Manual for the Guidance of Federal Aqencies, andin our audit standards, gives appropriate general criteriain this area- and our report's recommendations were basicallya restatement of this auidance coupled with an urging thatagencies review their situation and take appropriate stepsto correct identified weaknesses.

If crimes do occur, they should be analyzed to pinpointthe weaknesses in management's control processes that madethem possible. We believe that analyses of such crimes

37

should be made and the results provided to managers, design-ers, investigators, and auditors to help them strengthentneir operations and procedures.

The agencies that commented on our draft report oncomputer-related crimes were in general agreement withour views and indicated that they would take appropriatecorrective measures.

INADEQUATE SECURITY

Next I would like to turn to our report on physicalsecurity.

As more and more of the daily work of Government agenciesis put on computers, there is a trend toward centralizationof assets and data to a much greater extent than ever before.An agency may have concentrated in its computer center all ofits assets or key records and files which are the backboneand lifeblood of the agency's operations. Concentrations ofthis nature, while economically advantageous, pose potentiallyserious security problems. If the computer center should beput out of action for any reason, the effect on Governmentoperations could be catastrophic. While acts of nature--suchas windstorm, flood, and earthquakes--have put computer cen-ters out of operation, acts by dissident groups or terroristscould be equally serious. The vulnerability of insufficientlysafeguarded computer centers has already been convincinglydemonstrated on too many occasions. Examples of such situ-ations are detailed in our report.

During our security review, we found a number of hazardousconditions at 28 Government installations visited which led usto believe that the computer systems were not adequately pro-tected. We also visited 23 additional Federal data processinginstallations--which we knew had experienced physical securityproblems--to identify impacts or effects from security weak-nesses. I will now highlight a few of the conditions foundalong with some adverse effects of security weaknesses:

-- Fourteen locations had combustible paper and magneticLape files stored in computer rooms which exposedthese systems to loss from fire. The $6.5 millionPentagon fire loss which we discussed in our reportis a classic example of what can happen when firebreaks out and combustible paper and magnetic tapefiles are stored in, or near computer facilities.

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--Ten locations had computers in operation under over-head water pipes, which if broken, could dump wateron these systems. Also, two locations had computersinstalled in basements below ground level. Extensivedamage was done to a Post Office computer center whenflood water overran the banks of the Susquehanna Riverin 1972 and flooded the computer facilities.

-- At least seven locations were susceptible to sabotagebecause service pers.onnel were not supervised whileon the premises. Three computer locations were alsopossible targets for vandals. In 1970, a bomb ex-ploded outside an Army computer facility and killedone employee, injured three others and resulted indamage to assets of $2.4 million and a loss of 20years' accumulated data valued at $16 million.

-- Fourteen locations were without contingency plansto insure continuity of operations if a securityevent occurred. About 16.8 million manual militarypersonnel records were lost in a 1973 fire at theSt. Louis Record Center. No contingency plans werein existence at the time of the fire.

Other Federal installations we reviewed were not adequatelyprepared to deal with other types of security situations,or to recover from them.

We believe these situations arose in part because fewpeople in authority had recognized the need to consider thephysical security of their computer installations as a subjectdeserving special attention, and no Government-wide directionhas been provided. In our view, because of the concentrationof vital information in data processing centers, specificsteps are needed to assure that systematic management actionis taken and appropriate security measures are implemented.

We recommended in our report that the Office of Manage-ment and Budget (OMB) direct that agencies having computerinstallations assign a high-level management official specificresponsibility for physical security, and risk managementtechniques be used to determine the protection needed. Webelieve that pinpointing this responsibility and using riskmanagement techniques will go a long way toward correcting theproblem. Our report also contains guidelines which will behelpful to such officials, as well as referring them to otherpublications, including those of the National Bureau of Stand-ards.

39

OMB has not been receptive to our recommendations, stat-ing that agency heads are already responsible for protectingtheir installations. We believe that our report amply demon-strates that many agencies have not paid adequate attentionto physical security needs in the past, and, therefore, holdto the position that special attention needs to be given thematter.

INADEQUATE CONTROL OVER AUTOMATED ACTIONS

Now I would like to move on to a discussion of theissues in our report on automated systems.

The power of the computer is particularly well suited toapplications in which repetitive transactions based cn pre-established criteria are needed. Literally millions of Fed-eral actions take place daily based on such computer-generatedoperations without anyone checking them for correctness. Forexample, if issuance of material from inventory causes thebalance of stock on hand to drop below the reordering point,a purchase order can be generated automatically by the com-puter. Again, based on information supplied to the computer,it can decide whether usable material turned in to supplyby an organization should be scrapped or returned to inven-tory. Many such actions are taken without any manual reviewof the computer's calculations, and great volumes of workloadcan be processed in this manner, contributing to greatergovernmental effectiveness and efficiency. However:

-- If the computer program processing the work has er-rors in it; or

-- If there is incomplete or incorrect information inputto the computer; or

-- If data already in the computer is not accurate,complete, and current;

the transactions will still be turned out in great volume,but they may be wrong, and they probably will not be caught.Wrong transactions can cost moriey, and our report points outthat hundreds of millions of dollars have been unnecessarilyspent as a result of ich operations. Therefore, the mostimportant point made in our report is that poorly controlledsystems have the potential for issuing unreviewed paymentsand other actions involving billions of dollars in Governmentassets.

Here are typical examples of bad computer transactionscited in our report:

40

-- Army computers at several inventory controlpoints automatically issued material to over-seas customers from the wrong depots, and causedunnecessary cross-country shipments. The Armyestimated that ddditional transportation costsof $900,000 and added pipeline costs of $1.3million were incurred.

--A Veterans Administration computer did notproperly schedule required reductions in benefitpayments to veterans taking apprenticeship andother on-the-job training, setting up potentialautomatic overpayments projected at $700,000.

--An Army computer allowed the automatic issue ofradioactive material despite policy requirementscalling for a wanual review before such issuance.

--A Navy computer automatically--but incorrectly--initiated the overhaul of aircraft components,resulting in the unnecessary or prematureexpenditure of many millions of dollars.

Our report attributes these wrong operations to twobasic types of errors: data errors and program errors. Werecommended a variety cf corrective actions to minimize theoccurrence of such errors, including (1) management assurancethat systems have been properly designed and tested beforebeing placed in operation and (2) periodic testing of outputfor correctness after systems have been placed in operation.

Our recommendations have met with general acceptancefrom the agencies involved, and we are anticipating signifi-cant actions in these areas. The Office of Management andBudget, for example, issued on May 29, 1976, a strongly wordedmemorandum to all agencies directing them to take action toimprove their controls in the area of automated operationsand to report the results of such actions to OMB this fall.

We believe that each of our three reports exemplifysituations where there has been inadequate managerial atten-tion paid to the potential for loss which may exist. Ourrecommendations for improvement run to the agencies them-selves--to police their own activities--and to the Office ofManagement and Budget, the General Services Administration,and the Department of Commerce's National Bureau of Standards,all of which can and should provide leadership and guidance

41

toward resolving the problems. We have also suggested thatthe Civil Service Commission provide further emphasis in itstraining courses on tnose areas where we believe it wouldbe most helpful.

We welccme this Committee's interest in the reportsand are hopeful that, together, they will be beneficial instimulating Federal agency managers to recognize the extentof their responsibilities in these areas and to participateactively in directing corrective actions to minimize futurelosses whether they may result from criminal activity, frominadequate physical security, or from bad decisionmakingby their computers.

The whole question of top-level management involvementand participation in computer activities has been a subjectof considerable discussion within the computer professionitself. In the past, and even today, many key decisionsare being made by technicians and by computer operationsmanagers who lack tne perspective that top management canbring to bear.

One important facet of this involvement is the needfor management to stimulate and encourage its internalauditors to make more an' better audits of computer systems.Interral auditors should be a major weapon in management'sarsenal of controls, but in many cases auditors nave avoidedinvolvement with computers. Much needs to be done to trainthe auditors and develop sound approaches to this work.

Also, we understand that this Committee will raise thequestion of whether the laws of the land are adequate in thearea of computer crimes. Our audits were not directed toanswer questions in this area of inauiry. However, the De-partment ~,f Justice has the responsibility for administrationof the crilainal justice system, and we understand that theyare prepared to provide the expertise needed to handle anyinquiry into this area.

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CHRONOLOGY OF COMPUTER USE

IN FEDERAL PROGRAMS

THE-1950-1955- ER

The first computers installed in the Federal Governmentwere used primarily to support Department of Defense (DOD)research projects. In 1951 the Bureau of Census installeda computer to compile census data; this was considered thefirst business-type application.

THE 195541960 ERA

In this period the number of computers in use in theFederal Government increased twelvefold from 45 to 531. Inaddition to scientific research, some additional applicationswere to:

-- Pay old age and survivors benefits by theSocial Security Administration

--Computerize pension payment accounting by theVeterans Administration

-- Gather meteorological data by the Department ofCommerce

--Manage materiel and supply inventories in theDepartment of Defense aiid the National Institutesof Health

--Provide personnel management information in DODand the National Inst tutes of Health

--Generate labor statistics for the Departmentof Labor

THE 1960-1965 ERA

The Federal Government installed almost 1,900 additionalcomputers in this period. This increase resulted from greateruse of these machines in research and materiel management.Other applications introduced were to:

-- Process Veterans Administration insurance programdata

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-- Prepare bills of lading and Federal Telecommuni-cations System billings by the General ServicesAdministration

-- Prepare insurance and loan interest notices by theVeterans Administration

-- Control the functions of missile and air defensesystems by DOD

-- Process tax returns by Internal Revenue Service

--Process intelligence data by DOD

--Automate the patent search functions of thePatent Office

-- Process purchase orders by DOD

--Evaluate petroleum bids by DOD

--Assist public building management by theGeneral Services Administration

--Automate payrolls .nd personnel informationsystems in a number of agencies

-- Control srdce missions ny the National Aeronauticsand Space Administration

THE-1965-1970 r.RA

The number of computers in use by the Federal Govern-ment increased from 2,412 in 1965 to 5,277 in 1970. Thisincrease is attributable to the expanded use of computers forpreviously developed systems in financial and administrativeoperations as well as expanded use in research and development.Computers were also 'sed to:

-- Maintain flight records and passenger reservationsby DOD

--Process education benefit data by the VeteransAdministration

--Automate clinical laboratory processing in Veteranshospitals

-- Manage housing grants of the Department of Housingand Urban Development

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-- Analyze satellite weath!-r data by DOD

-- Store and retrieve criminal data by the Departmentof Justice

--Man;age defense contracts by Defense Contract Adminis-trative Support Regions

-- Issue savings bonds by the Department of the Treasury

--Process postal money orders

-- Predict crop levels by the Department of Agriculture

--Analyze housing market data by Department of Housingand Urban Development

--Manage inventories in the General Services Adminis-tration and Departments of Transportation, and Housingand Urban Development

--Standardize and integrate personnel and financialsystems in DOD and some civil agencies

--Assist in assigning, training, etc. of personnel inDOD

THE 1970-1976 ERA

By 1976 the number of computers in use to support theoperations of the Federal Government had increased to 9,500.Computers were now being used in almist every aspect of Fed-eral activities. Additional use was nade in program manage-ment and operations. For example, to:

-- Generate monthly bills for loans by the VeteransAdministration

--Report on Title I Home Improvement Loans by the De-partment of Housing and Urban Development

--Process freight waybilling by the Department ofTransportation

--Automate air traffic control functions in FederalAviation Administration

-- Pay revenue sharing funds by the Departmentof the Treasury

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-- Forecast global weather by the Department of Commerce

--Assist in grant management by the Department of Jus-tice

-- Analyze satellite d :a for crop predictions by theDepartment of Agriculture

--Manage energy resources by the Departnent of theInterior and the General Services Administration

--Forecast home ownership assistance by the Departmentof Housing and Urban Development

--Computerize a medical information system by theDepartment of Health, Education, and Welfare

--Analyze accident data by the Department of Transpor-tation

-- Process case records by the Supreme Court

--Automate a legal information and retrieval systemby the Department of Justice

--Coordinate broker/dealer examinations by the Securi-ties and Exchange Comminsion

--Manage numismatics operations by the Department ofthe Treasury

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APPENDIX I APPENDIX I

SUMMARY OF REPORTS ISSUED

Both before and since passage of the Brooks Act (PublicLaw 89-306), we have done a lot of audit work in the ADParea. A complete list of the reports issued from November 1,1965, to December 31, 1976, is provided in appendix II alongwith a code that identifies the issue areas covered by thereport. Following is a list of the codes used, the issueareas reported on, and the number of reports listed in appen-dix II that treat the issue.

Number ofCode Issue area times reported

A GOVERNMENT-WIDE MANAGEMENT 27

B ACQUISITION AND SHARINGB-1 -Lease or buy 11B-2 -Alternative acquisition

procedures 9B-3 -Alternative sources of supply 9B-4 -Software requirements and

sharing 8

C UTILIZATION OF ADP RESOURCESC-1 -Full use and sharing 31C-2 -Reuse of resources 8C-3 -Computer evaluation techniques 7C-4 -Maintenance 3

D PLANNING AND CONTROLLINGD-1 -Planning 88D-2 -Controlling 56D-3 -Documentation 11D-4 -Standardization 11D-5 -Grantees and Contractors 18

Total a/297

a/Some reports cover more than one issue area. For example,the report on a proposed automated tax administration sys-tem for the Internal Revenue Service on page 73 (LCD-76-114,11/23/76), has software (B-4), planning (D-l), and con-trolling (D-2) listed as issue areas discussed. Therefore,the total number of issues reported (297) exceeds the totalnumber of reports (175).

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APPENDIX I APPENDIX 1

IMPROVING GOVERNMENT-WIDFMANAGEMENT (CODE A)

GAO has submitted 27 reports suggesting improvementsby the central managers; that is, the Office of Managementand Budget, the General Services Administration, and theDepartment of Commerce. Mr. Scantlebury's statements inthe early section of this report cover in detail most ofthe Government-wide management points covered in these re-ports. (See pp. 12 to 29.)

IMPROVING THE WAY COMPUTER RESOURCESARE ACQUIRED AND SHARED (CODE-B)

Equipment leased without fullconsidering cost savings availableby purchase methods (Code B-1

The Federal Govet;ment's practice of leasing data proc-essing equipment originated before the development of elec-tronic computers, at a time when mechanized data processingsystems consisted primarily of electric accounting machines.Most of these machines were leased.

We submitted 11 reports illustrating that, when leaseversus cost comparison studies were made, large sums couldbe saved by purchasing some components of the ADP systems.

In October 1961, after studying the various factorsaffecting lease-purchase decisions, the Officc of Managementand Budget issued Circular No. A-54 prescribing policies forFederal agencies to follow in acquiring ADP equipment. Thiscircular requires that agencies make cost comparison studiesusing a 6-rear life factor to ascertain whether leasing orpurchasing is most economical. In other words, if the costcomparison showed that rental charges over a 6-year periodwould exceed purchase and related maintenance costs over thesame period, the equipment should be purchased. Normally,most systems would have been purchased under this policy.However, the application of the policy depends upon the user'shaving a continued need for the equipment throughout the6-year period. Many users anticipated changes in their ADPequipment and for this reason did not purchase many machines.

Hardware acquired under Federalcontract procedures withoutconsiiering other alternatives (Code B-2)

On nine occasions, we reported that large savings arepossible by acquiring ADP systems by such means as increasing

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APPENDIX I APPENDIX I

competition, multiyear leasing, complying with the objectivesof Public Law 89-306. (See pp. 13 to 16.) In summary our re-ports showed that

-- the Government should use commercial leasing firmsmore often,

-- the Government should seek more competition and useschedule contracts less often, and

-- GSA should make greater use of its centra. procure-ment authority.

GSA data shows that during the past decade most computerequipment was still being acquired by noncompetitive procure-ment practices--sole source, make and model, brand name, orequal. In fiscal year 1975 only 36 percent of the equipmentacquired by Federal agencies was procured in a fully competi-tive manner.

Computers acquired from equipmentmanufacturers without considerLngalternate sources of supply (Code B-3)

On nine occasions we reported that Federal agenciescould save money by using more economical sources ofsupply for ADP peripherals and components. (See p. 21.)

Software requirements and sharingopportunities notfullyevaluate- (Code B-4)

We published eight reports involving the software re-quirements and sharing area. Software is a term that hascome into use with ADP systems to identify computer programs,procedures, and related documentation and to distinguishsuch features from the systems hardware components. Pages 23to 27 summarize the problem and action taken by Federal agen-cies on our software findings. Our reports generally sug-gested that the Government establish and maintain a refer-ence index of computer programs, make detailed technicalevaluations of all programs intended for use by the Govern-ment, and promulgate Federal standards for computer languagesand program documentation.

No one knows how many thousands of computer systemsand programs are now in operation within the FederalGovernment or how much it cost to design and program thesesystems. Likewise, no one knows the amount of Governmentfunds spent to procure, design, and program similar systemsat many Federal agencies.

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APPENDIX I APPENDIX I

IMPROVING THE USE OF ADP RESOURCES (Code C)

Opportunity for savings by usingcompater facilities more (Code C-i)

Acquiring computer systems and the related softwareand other services required to make them run effectivelyis expensive. Because of this, specific and concentratedattention must be placed on using computer resources asfully as possible.

In 31 reports, we have cited examples in which largesavings were possible through more use of Federal computerfacilities. Pages 5 to 11 summarize the conditionsfound and action taken by Federal agencies on our majorutilization findings.

Additional savinqs availableby reuse of ADP resources (Code C-2)

Eight reports were sent to the Congress during thepast 11 years rel. ing to the reuse of ADP resources.

Reuse procedures

Federal Property Management Regulations require agenciesto report excess ADP equipment to GSA. Upon receiving sucha report, GSA reviews its files to determine whether anyagency has indicated a need for the equipment. If no agencyhas indicated such a need, the equipment is then advertisedin excess equipment bulletins. These bulletins are circu-lated to Federal agencies before the ADP equipment is de-clared as excess. The amount saved by reusing Government-owned equipment is not known because no reasonable basisfor measurement can be determined. However, the redistri-bution of Government-owned excess ADP equipment at originalacquisition costs has been estimated by GSA at over $1billion during the past 11 years.

Opportunity for greater efficiencyby using computer evaluationtechniques (Code C-3)

We nave published seven reports that recognize the sav-ings possible by using performance evaluation tools andtechniques. In 1972 and 1974, we recommended that centralmanagement agencies encourage Federal agencies to use thesetechniques, especially before acquiring additional computerresources. Other specific recommendations concerned devel-oping performance criteria, training, and designing

50

APPENDIX I APPENDIX I

"built-in" techniques in future systems and controls. Ourstudies also noted that using computer measurement andevaluation tools and techniques required highly skilledtechnicians and that very little training was available inthese areas.

The central management agencies acted to improve Fed-eral computer operations by the use of computer evaluationtechniques. 1/ Steps include:

-- In August 1971 the National Bureau of Standardsformed the Federal Information Processing StandardsTask Oroup 10. The Group was responsible forident fying and recommending guidelines for(1) hardware and software component evaluationcriteria, (2) measurement techniques, and (3)procedures that could be applied throughoutthe Federal Government to aid in installationsoperational improvements and computer systemand component selections. Specific areas ofinvestigation included the use of simulation,performance monitors, benchmarks, and analyticnethods. In March 1973 the Group commendeda 2-year project to develop appropriate guidancein the use of these techniques.

-- The Computer Performance Evaluation Users Groupwas formed in the Department of Defense andtransferred to NBS sponsor-hip early in 1971.This Group provides a means or exchanging infor-mation between Federal agencieL un performanceevaluation techniques but has no responsibilityfor developing Government-wide guidance.

-- GSA established a Federal Computer PerformanceEvaluation and Simulation Center to serve Federalagencies throughout the country. The Center's

1/The term "computer evaluation techniques" is associatedwith tools (hardware and software monitors) and methodsused to measure or evaluate the performance of computersystems. Hardware monitoring uses electronic devices todetermine how much and when the various components of acomputer system are being used. Software monitoringuses special computer programs to check other computerprograms to see if these programs use computer capabili-ties efficiently. With this information, the workloadcan be distributed as evenly as possible among thecomponents and they can be used more efficiently.

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APPENDIX I APPENDIX I

purpose is to provide economical computer evalu-ation services on a cost-reimbursable basis.

Obtaining adequate maintenanceservice at reasonable cost (Code C-4)

We issued three reports in the maintenance areas. Wereported that agencies could realize cost savings and operat-ing advantages in this area by

--performing in-house maintenance services at selectedlocations,

-- contracting with other outside maintenance companies,and

-- selecting the proper amount of maintenance coveragenecessary to operate their computer facilities.

Operating advantages were greater management control over themaintenance work and Lighter security controls at classifiedlocations. We suggested that policies be developed in thisarea.

Action by central management agencies include developmentof a Federal policy (OMB Circular A-76) which calls for execu-tive agencies to study all alternative ways of maintaining ADPequipment and to rely on private enterprise for maintenanceservices instead of establishing or continuing an in-houseprogram.

IMPROVING THE PLANNING AND CONTROLLINGOF ADP RESOURCES (Code D)

Since the introduction of the computer into Federaloperations in the early 1950s, much has been discussed, writ-ten, and published about the need for better planning, devel-oping, and controlling this new technology. (See p. 11 foran example on planning.)

Better overall planning needed to improve systemdevelopment and desin efforts (ode D-l)

We have submitted 88 reports which illustrated that Fed-eral agencies acquired computer systems without proper plan-ning for the design and development of computer systems.Deficiencies included failure to

--define objectives clearly,

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APPENDIX I APPENDIX I

-- quantify expected benefits adequately,

--determine requirements for use of the equipment, or

--determine cost of other alternatives.

These deficiencies resulted in

--prolonged system development cycles,

-- cost overruns,

--premature acquisition of costly equipment, and

-- system developments that were unable to satisfythe demands placed upcn them.

We recommended that Federal agencies:

--Establish procedures for systematically evaluatingthe need for new system development projects.

--Establish procedures for validating estimated develop-ment costs of new systems and the value of expectedbenefits and for arriving at more realistic develop-ment costs.

-- Reevaluate system development projects already underwayand state the specific benefits expected.

--Identify and document how each project under develop-ment will help the agency, cost out alternativesso that the most economical means of meeting its in-formation needs can be identified and pursued, andstop further development if the project no longermeets user needs.

-- Reevaluate the need for computer equipment, even ifthis requires releasing some equipment.

In other reports we cited the need for a central planninggroup to help solve some of the Nation's problems by planningfor integrated Government ADP systems. Integrated systems re-duce paperwork and cut down on costs.

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APPENDIX I APPENDIX I

More guidance needed toimprove management controlover ADP resources (Code D-2)

During the past 11 years, as part of our auditfunction, we have made many reviews of the controls overADP syst'ems. Over 56 reports were issued pointing out theneed for better controls. For instance, we found that-

-- Determining how the system worked or what controlswere built into it was difficult, because the flowcharts and other documentation were out-of-dateor had never been prepared.

--There was insufficient separation of duties; thusone person could alter or initiate unauthorizedtransactions--an unsuitable situation when checksare involved.

-- Valuable records were lost or stolen because physi-cal control over the computer tapes or other materialwas inadequate.

-- Procedures were not adequate to reasonably make surethat all documents would be promptly processed.

-- Changes in the computer programs were not adequatelycontrolled; such controls are essential to preventfraud, errors, and other irregularities.

'ur review results were made available to the head ofeach location at which audits were made. They generallyagreed with our findings and suggestions for improvement andacted to improve operations. Also, specific recommendationswere made to the agencies to strengthen management controlover the computer systems.

Perhaps our three most important reports on the need forbetter controls and protection for Federal computer systemswere issued in 1976. These reports pointed out that many ofthe Government's 9,500 computers are inadequately controlledor protected against

--computer-related crimes;

-- sabotage, crime, fire, water, or natural disasters;and

--automatically making wrong transactions or decisions.(See pp. 30 to 46.)

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APPENDIX I APPENDIX I

Better documentation is neededto improve operations andsharing opportunities (Code D-3)

On 11 occasions we reported that better documentationis needed to improve operations and sharing opportunities.In the ADP field the term "documentation" refers specificallyto the information recorded during the design, development,and maintenance of computer applications to explain pertinentaspects of a data processing system (such as purposes, meth-ods, logic, relationships, capabilities, and limitations).An example of one form of documentation--flow charting--isshown on the following page. Pages 25 to 27 summarize thefindings, conclurions, and recommendations contained in theseeight reports.

More standardization needed tohelp reduce high costs (Code D-4)

On 11 occasions we reported that the Federal standardi-zaticn program has not been ve-ry successful and that we didnot foresee much transferability of computer systems or in-crease in productivity until the Government improved itsstandardization efforts. (See pp. 27 to 29.)

Better management controls neededover grantee and Governmentcontractors' ADP activities (Code D-5)

During the 11 year period, 18 reports were issued ongrantee and Government contractors' ADP activities. In thesereports, we evaluated the controls and procedures establishedby Federal agencies to make sure that the acquisition and useof computer equipment by grantees or contractors were as eco-nomical as possible. Generally, we found that although Fed-eral policies and procedures were available, they did notspecify some important analyses needed or some alternativesto be ccnsidered in keeping the cost of acquiring computerequipment low. As a result, grantees and contractors wereallowed to:

-Obtain new computer systems or add to existingsystems without thoroughly evaluating their needs.

-- Keep certain benefits earned although the Govern-ment was absorbing most of the costs.

-- Exclude certain sources of equipment supply thatnormally offered lower prices.

55

APPENDIX I APPENDIX I

FLOWCHARTING----IS ONE FORM OF DOCUMENTATIONAND LOOKS LIKE THIS FOR PREPA-RiNG PAY CHECKS

MASTER

READ TIME

CARD

CALCULATEPAY

PREPARE A

PAY CHECK

*AD1

YES

In the rbove example, a time card containing tho number of hours worked end o mosterpoy

record containing information on rate of pay for on individual employoolla read, his salary

is calculated, and an appropriate pay check is prepared for disbursement.

56

APPENDIX I APPENDIX I

In summary, we concluded that OMB, GSA, and other Fed-eral agencies should work together to establish consistentguidelines to make certain that contractors and granteesobtain automatic data processing equipment more economi-cally.

57

APPENDIX II APPENDIX II

LIST OF ADP REPORTS ISSUED BY GAO

FROM NOVEMBFR 1965 TO DECEMBER 1976

Issues

reported

Procurement "f Computer Systems by the B-1

Air Force (B-158121, 12/16/65)

Automatic Data Processing Activities at D-1,

the Atomic Energy Commission's Sandia D-5

Laboratories (1/28/66)

General Electric Company's Leasing of C-1,

Electronic Data Processing Systems D-5

(B-146732, 1/28/66)

Rental Charges for Data Processing B-2,

Equipment at the Sperry Rand Corpora- D-5

tion (B-157929, 2/18/66)

Management of Certain Equipment Pur- C-2

chased by the Federal Aviation Agency

(3/24/66)

Planning for and Utilization of Auto- C-1,

matic Da'.a P:.ocessing Equipment D-1

(B-154068, 5/25/66)

Automatic Data Processinq Activities B-l,

of the Union Carbide CoLporation D-2

(9/7/66)

Acquisition of Computers With Capacities C-1, D-l,

in Excess of Immediate Needs (B-133182, D-5

9/30/66)

Control Ove! the Procurement of Computer C-l,

Work From Commercial Vendors (B-160095, D-5

10/18/66)

Selective Review of Automatic Data Process- C-1, C-2,

ing Capacity Available for Use by Public D-1

Works Centers (B-158837, 3/31/67)

58

APPENDIX II APPENDIX II

Issuesreported

Review of the Acquisition and Instal- D-1,lation of Computers by the United States D-2Army, Pacific (B-160417, 4/28/67)

Utilization of Automatic Data Processing C-1,Equipment by the South Bend Community D-5School Corporation (B-162080, 8/24/67)

Adequacy of the Department of Aqriculture'E D-2,Centralized Automatic Payrolling Systam D-3(B-146951, 9/28/67)

Costs Charged to Government by Contractors B-1,Renting RCA-Manufactured Automatic Data Pro- D-5cessing Equipment (B-146732, 10/12/67)

Report on Review of Accounting, Disbursing, D-2and Automatic Data Processing Operationsof Regional Finance and Data ProcessingCenter at Paris, France (B-146703, 1/31/68)

Acquisition of Automatic Data Processinq D-1Equipment by the Peace Corps (L'-163617,2/27/68)

Inquiry Into Practices Followed by the De- D-lpartment of Defense Components in Acquiringand Installing New Automatic Data ProcessingEquipment for Use in Computerized Manage-ment Systems (B-163074, 3/13/68)

Maintenance of Automatic Data Processing C-4Equipment in the Federal GoveLnment (B-115369,4/3/68)

Review of Reliability of the Air Force Per- D-2sonnel Data System (B-164471, 7/25/,'68)

Examination Into the Control Over Procure- C-2, D-lment, Use, and Disposition of Magnetic Com- D-2puter Tape in the Department of Defense(B-164332, 9/18/68)

59

APPENDIX II APPENDIX II

IssuesrepULued

Utilization of a Computer by the Export- C-1, D-1Import Bank of the United States (B-114823,10/2/68)

Need for the Federal Communications Commis- C-1sion to Make Fuller Use of Its Automatic DataProcessing Facilities (B-164987, 11/1/68)

Centralization of the Army's Supply Manage- D-lment Operations (COSMOS) System (B-163074,1/16/69)

Need for improvements in the Automated Cen- D-2, D-3tral Payroll System of the Department ofHealth, Education, and Welfare (B-164031,1/17/69).

Inquiry Into Operations of the McDonnell D-2,Automation Company, a Division of McDonnell D-5Douglas Corporation, St. Louis, Missouri(B-164026, 3/7/69)

Aspects of the Government-Wide Automatic A, C-l,Data Processing Sharing Exchange Program D-5(B-115369, 3/31/69)

Review of Automatic Data Processing Activi- D-1ties of the Office of Management Support,Department of Justice (B-166549, 4/16/69)

Study of the Acquisition of Peripheral Equip- B-3, D-4,ment for Use With Automatic Data Processing C-4Systems (8-115369, 6/24/69)

Report on Administration and Control cf Pro- B-l, D-1,curement and Utilization of Automatic Data D-2Processing Equipment (6/24/69)

60

APPENDIX II APPENDIX II

Issuesreported

Al,,omatic Data Processing Policies, Pro- B-1, D-5,cedures, and Practices, Jet Propulsion D-1, D-2,Laboratory (B-162407(6), 7/7/69) D-3

Selected Automatic Data Processing Activi- C-1, D-l,ties (B-166723, 7/31/69) D-4

Forest Service's Planning for Acquisition D-1and Operation of Computers (10/31/69)

Procurement of the Magnetic Computer Tape A, C-2Used by Agencies of the Federal Government(12/1/69)

Opportunities for More Effective Use of an D-1Automated Procurement System for Small Pur-chases (5-162394, 1i/17/69)

Financial Management of Bureau of the Mint D-1Operations Needs Improvement (B-114877,1/16/70)

Automatic Data Processing Activities of State C-1, D-l,Welfare Agencies Financed by the Social and D-5Rehabilitation Service (B-164031, 2/24/70)

Acquisition and Utilization of a Computer for C-1,the U.S. Naval Postgraduate School, Monterey, D-1California (B-152086, 2/25/70)

Problems in Developing Army's Combat Service D-1Support System (CS3) (B-163074, 3/18/70)

Further Improvement Need,] in the Management C-2,of Magnetic Tapes by Goddard Space Flight D-2Center (B-164392, 4/22/70)

Activities of the Department of Agriculture's C-1Washington Data Processing Center (B-167008,4/23/70)

Report on Suqgestions for Improving the Effec- D-2tiveness and Economy of the System for Exchangeof Information on Active Research and Techno-logical Work (B-1633S1, 7/13/70)

61

APPENDIX II APPENDIX II

Issuesreported

Inquiry Into Management of Automatic D-1Data Processing Systems (B-163074, 8/13/70)

Status of Development of the Joint Uniform D-1Military Pay System (B-159797, 8/17/70)

Opportunities for Improving the Federal D-2, D-3Crop Insurance Corporation's Automated D-4System for Insurance Programs (B-114834,8/28/70)

Savings Possible by Buying Automatic Data B-2,Processing Equipment or by Leasing It From D-1Commercial Leasing Firms (B-114829, 11/24/70)

Information Gathering and Disseminating B-l,Activities of the National Library of Medicine D-1(B-164031(2), 11/30/70)

Improved Effectiveness in Meeting the D-1Supply Requirements of Overseas U.S. Agencies(B-114807, 12/9/70)

Problems in the Acquisition of Standard Com- D-1puters for World-Wide Military Command andControl System (B-163074, 12/29/70)

Collection of Supplemental Duties On Imported D-2Merchandise by the Bureau of Customs (B-114838,1/27/71)

Potential Problems in Developing the Air Force's D-1Advance Logistics System (B-163074, 2/4/71)

Savings Realized Through Use of a Computer for D-1Processing Small Purchases Awarded by DefenseIndustrial Supply Center (B-162394, 2/9/71)

Computer Simulations, War Gaming, and Contract D-2Studies (B-163074, 2/23/71)

Problems in Developing the Corps of Engineers' D-1Automated Management Information System(B-163074, 4/21/71)

62

APPENDIX II APPENDIX II

Issuesreported

Multiyear Leasing and Government-Wide A,Purchasing of Automatic Data Processing B-2Equipment Should Result in SignificantSavings (B-115369, 4/30/71)

Program to Update the Computer Capabil- D-1ities of the Military Command and ControlSystem (B-163074, 5/6/71)

Development and Testing of the Army's Com- D-1bat Service Support System Are Incomplete(B-163074, 5/7/71)

Problems in Implementing the Defense Supply D-1Agency's Standard Automated Materiel Manage-ment System (B-163074, 6/4/71)

Jet Propulsion Laboratory's Progress in Com- C-l,bining its Business and Scientific Data Pro- D-5cessing Operations (B-162407(6), 6/9/71)

Opportunities to Improve the Redistribution A, B-l,of the Federal Government's Excess Automatic C-2Data Processing Equipment (B-115369, 6/15/71)

Acquisition and Use of Software Products for A, B-4, C-l,Automatic Data Processing Systems in the Fed- D-l, D-3,eral Government (B-11 5369, 6/30/71) D-4

Case Studies of Auditing in a Computer-Based D-3,Systems Environment (B-115369, 6/71) D-2, D-4

Need to Evaluate and Improve Postal Source D-1Data System Before Further Expansion (B-114874,7/1/71)

Comments to a Report on Automatic Data Process- D-2ing Prepared by the Joint Economic Committee(B-115369, 7/2/71)

Use of Computer System Hardware and Software at C-l, D-1the National Civil Defense Computer Facility(B-163074, 7/2/7.)

63

APPENDIX II APPENDIX II

Issuesreported

Opportunities for Improving the Automated D-1Supply System of the Veterans Administra-tion (B-133044, 7/7/71)

Further Action by Veterans Administration D-1

Could Reduce Administrative Costs and Im-prove Service to Veterans Receiving Educa-tional Benefits (B-114859, 7/8/71)

Substantial Savings by Obtaining Competition B-2, Ain the Rental of the Government's PunchedCard Accounting Machine Equipment (B-115369,7/15/71)

Development of Program for Computer-Aided B-4Structural Detailing of Ships (B-171635,7/19/71)

Implementation of the Army's Base Operating D-1Information System (BASC ') (B-163047,8/2/71 '

Army's Evaluation of Alternative Designs D-ifor Providing Computer Capabilities Neededfor SAFEGUARD Antiballistic Missile System(B-164250, 8/20/71)

Savings Available Through a Covernment-Wide C-2, AProgram to Rehabilitate Instrumentation Tape(B-164392, 8/23/71)

The Navy Integrated Command/Management Infor- D-1mation System (NAICOM/MIS) (B-153074, 9/10/71)

Adequacy of the Automated Management Informa- D-2

tion System (AMIS) of the Veterans Adminis-tration (B-133044, 9/14/71)

Pricing of Software Products for Automatic A, B-4,Data Processing Systems (B-115369, 11/16/71) D-3

Use of Automatic Data Processing Equipment D-5Operated by Contractors (B-115369, 11/24/71)

64

APPENDIX II APPENDIX II

Issuesreported

Need for Improved Controls in the Automated D-2, D-3Central Payroll System of the Department ofAgriculture (B-146951, 11/29/71)

Acquisition by the Air Force of Automatic B-1, AData Processing Equipment at the Environ-mental Technical Applications Center(B-151204, 1/20/72)

Questionable Acquisition of Automatic Data C-l, D-1Processing Equipment by the Naval Air De-velopment Center (B-163074, 4/3/72)

Progress of the Army's Base Operating Infor- D-1iiation System (BASOPS) (B-163074, 4/11/72)

Development and Procurement of a rMulti-pur- 0-1pose Computer System by the Navy (B-1b3074,5/22/72)

Development of the Army's Combat Service Sup- D-1port System (CS3) (B-163074, 6/2/72)

Cost for Automatic Data Processing Activities D-2, Ain the Federal Government (B-115369, 6/5/72)

Policy for Making Government-owned Software B-4, C-1Available to Government Agencies, Their Con-tractors and Private Industry (B-115369,6/22/72)

Opportunity for Greater Efficiency and Savings C-3, AThrough the Use of Evaluation Techniques in theFederal Government's Computer Operations(B-115369, 8/22/72)

Further Improvements Needed in Controls Over D-5Government-Owned Plant Equipment in Custodyof Contractors (B-140389, 8,'29/72)

65

APPENDIX II APPENDIX II

Is3uesreported

Government Computer Acquisition Practices B-2, C-4(B-115369, 9/1/72)

Acquisition of a Computer System by the De- B-1, B-2,fense Communications Agency (B-174830, D-19/7/72)

Better Management Control Needed Over the D-2Processing of Claims Under the CivilianHealth and Medical Program of the UniformedServices in California (B-133142, 9/14/72)

Acquisition of a Computer and Related Services D-1by the Department of Housing and Urban Develop-ment (10/6/72)

Use of Computer-Output Microfilm to Increase D-1, Athe Effectiveness of Computer Operations(B-115269, 10/18/72)

Identification of Excess Property That Could D-2be Returned to The General Services Admini-stration Supply System (B-146929, 10/25/72)

Followup Review of Automatic Data Processing C-3, D-l,Activities, Jet Propulsion Laboratory D-5(B-162407(6), 11/3/72)

Use of Hardware and Software Monitors C-3, A(B-115369, 12/5/72)

Negotiation of More Permissible Peripheral E-3, AAttachment Clauses in Computer Lease Con-tracts (B-175750, 12/13/72)

Development of a Nationwide Criminal Data D-1Exchange System--Need to Determine Cost andImprove Reporting (B-171019, 1/16/73)

U.S. Agencies Could Benefit by Better Manage- B-1, D-5ment of ADP Activities of Government Contrac-tors (B-115369, 3/2/73)

66

APPENDIX II APPENDIX II

Issuesretorted

Coordination of Computerized Information C-1Systems Reporting on Active Research Ef-forts (B-115398, 3/29/'73)

Revisions Needed in Financial Management APolicies of the Federal Government'sAutomatic Data Processing Fund (B-115369,4/17/73)

Estimate of Total Annual Costs For A, D-2Automatic Data Processing (B-115369,4/25/73)

Problems Which Result in the Inefficient C-l, D-l,or Ineffective Use of Automatic Data C-2, D-2,Processing Equipment (B-115369, 5/2/73) B-4

Advantages and Limitations of Computer D-2Simulation in Decisionmaking (B-163074,5/3/73)

Development and Acquisition of the Navy's D-1Junior Participating Tactical Data System(B-163074, 5/7/73)

Use of Law Enforcement Assistance Admini- D-2stration (LEAA) Funds by the St. LouisMetropolitan Police Department (B-171019,5/10/73)

The Federal Catalog Program: Progress and D-2Problems in Attaining a Uniform Identifi-cation System for Supplies (B-146778,6/20/73)

Status of the Army's Combat Service Support D-1System (CS3) (B-163074, 7/18/73)

Adequacy of the Automated Personnel Manage- D-2ment Information Systems of the Departmentof Health, Education, and Welfare (B-164031(3),7/27/73)

67

APPENDIX II APPENDIX II

Issues

reeorted

Duplication of Information in Data Banks D-2, D-5on Contractors' Independent Research andDevelopment Programs (B-163391, 8/1/73)

Award of Subcontract for Processing Medi- D-1care Claims for Physicians' Services inOhio and West Virginia (B-164031(4), 8/2/73)

Use of Computers at Naval Laboratories C-1, C-3,(B-115369, 8/31/73) D-1

Development of a Management Information D-1System at the Colorado River Indian Reser-vation (B-'14868, 12/6/73)

Improving the Acquisition of Computer Sys- D-1tems (B-164031(4), 1/24/74)

Development and Use of Computerized Crimi- D-lnal History Information (B-171019, 3/1/74)

Status of the Army's Base Oper.cing Sys- D-1tem (BASOPS) (B-163074, 4/1/74)

Increased Efficiency Predicted If Informa- D-1tion Processing Systems of Social SiecurityAdministration Are Redesigned (B-164031(4),4/19/74)

More Competitiun Needed in the Federal Pro- B-2, Acurement of Automatic Data Processing Equip-ment (B-115369, 5/7/74)

Emphasis Needed on Government's Effort to A, D-4Standardize Data Elements and Cpdes forComputer Systems (B-115369,'5/16/74)

Effectiveness of the Department of Defense's D-lAutomated Worldwide Household Goods Informa-tion System for Traffic Management (B-133025,5/28/74)

68

APPENDIX II APPENDIX II

IssuesrepLor2ted

Tools and Techniques for Improving the Effi- C-3, Aciency of rederal Automatic Data ProcessingOp :tions (B-115369, 6/3/74)

Opprtunities to Reduce Costs and Improve Effec- D-l, D-2tiveness of Payroll System Operations (8B-146856,7/9/74)

Status of the Air Force's Advanced Logistics D-lSystem (ALS) (B-163074, 7/12/74)

Procuring Equipment for St. Louis Postal Data B-3Center (B-180235, 7/17/74)

Procuring Equipment for New York Postal Data B-3Center (B-180235, 7/19/74)

Efforts to Improve Standardization and Utili- D-4zation of Automatic Data Processing Resources(B-115369, 8/6/74)

How Criminal Justice Agencies Use Criminal D-2History Information (B-171019, 8/19/74)

Improvement Needed in Documenting Computer A, D-3Systems (B-115369, 10/8/74)

Problems and Progress of the U.S. Army Ma- D-l, B-4teriel Command's Automated Data ProcessingService Center Conc!pt (B-178806, 10/9/74)

Federal Enviromental Data Systems (B-177222, C-111/22/74)

Increased Use of Computer-Output-Microfilm D-1, Aby Federal Agencies Could Result in Savings(B-115369, 11/26/74)

Problems Affecting Operations at the St. D-1Louis Postal Data Center (B-180235, 12/10/74)

Procurement by the General Services Admini- D-1stration of Data Entry Equipment From LinolexSystems (LCD-75-104, 1/2/75)

Effectiveness of the Federal Personnel Manage- D-1ment Tnformation System (FPCD-75-124, 2/10/75)

69

APPENDIX II APPENDIX II

Issuesre2orted

Need for More Effective Management of Trans- D-1portation Data Systems (LCD-75-205, 2/11/75)

Opportunities to Improve the Utilization and C-1, C-3,Management of Automatic Data Processing Re- D-1, D-2sources (FGMSD-75-12, 2/26/75)

Effectiveness in Computing Procurement Re- D-2quirements at the Navy Aviation SupplyOffice (LCD-75-423, 3/3/75)

Aspects of the Office of Education's Financial D-2Management Activities (MWD-75-69, 3/5/75)

Opportunities for Improving Computer Use in C-l, D-l,the Bureau of the Mint (FGMSD-75-19, 3/20/75) D-2

Opportunities for Improving Computerized D-2Civilian Payroll Processing Operations(FGMSD-75-15, 3/24/75)

Improvements Needed in Medicaid Program D-2Management Including Investigation ofSuspected Fraue and Abuse (MWD-75-74,4/14/75)

Use of Appropriation Increase for the Insti- B-4, C-3,tute of Computer Science and Technology at D-2, D-4the National Bureau of Standards (FGMSD-75-24,4/15/75)

Ways to Improve Management of Automated Data D-l, D-3Processing Resources (LCD-74-110, 4/16/75)

Evaluation of the Civil Service Commission's D-2Automated Career System (FPCD-75-149, 4/18/75)

Cost Information on Automatic Data Processing D-2(B-115369, 5/12/75)

Improved Planning--A Must Before a Department- D-1Wide Automatic Data Processing System is Ac-quired for the Department of Agriculture(LCD-75-108, 6/3/75)

70

APPENDIX II APPENDIX II

Issues

rep2orted

Need for Improvements in tile Automated Pay- D-2roll System of the )epartmenL of Housing andUrban Development (FGMSD-75-31, 6/18/75)

Limited Progress Made in Developing Loan Ac- D-3, D-2

counting System (FGMSD-75-37, 6/18/75)

Aspects of the Putomatic Data Processing Pro- D-l, D-2gram of the World-wide M.ilitary Command andControl System (LCD-75-116, 7/21/75)

Opportunity for Savings of Large Sums in A, B-l,Acquiring Computer Systems Under Federal B-2, B-3,Grant Programs (FGMSD-75-34, 7/24/75) C-l, D-l,

D-5

....proved Planning and Management of Infor- D-1mation Systems Development Needed (LCD-74-118,8/18/75)

Method Internal Revenue Service Used to B-3Obtain Tt.qttrocessing Services from Con-trol Data Corporation During Fiscal Year1975 (LCD-76-106, 9/15/75)

Further Actions Needed to Centralize Pro- A, B-2,curement of Automatic Date Processing Equip- D-1ment to Comply with Objectives of Public Law89-306 (LCD-74-115, 10/1/75)

Improving Civilian Payroll Operations of the D-2Military District of Washington (FGMSD-75-26,10/9/75)

Need forMore Effective Controls over Computer- D-2ized Payroll Processing Operations (FGMSD-76-3,10/10/75)

Limited Study of Department of Agriculture's D-1, D-2Automated Personnel Management InformationSystem (FPCD-76-23, 12/16/75)

S'urvey of Internal Controls for Veterans Admini- D-l, >.2stration Computer-Based Compensation and PensionBenefit Payment Sys-ems (MWD-76-90, 2/6/76)

71

APPENDIX II APPENDIX II

Issues

reported

Automated Support of Depot Operations Could be D-1Improved (LCD-76-108, 2/20/76)

Comparative Cost of Processing Medicine Claims B-3by Sub-ontrac-o1 vs. In-huse Data ProcessingMethods (MWD-76-87, 3/1/76)

Propo.ed Acquisition of Automatic Data Process- B-3ing Equipment (LCD-76-120,. 4/16/7v)

Survey of Marine Corps Jo:.nt Uniform Military D-2Pay Systems (FOD-76-17, 4/19/76)

Uses of Minicomputers in the Federal Govern- A, D-1ment: Trends, Benefits, and Problems (FGNSD-75-53, 4/22/76)

Improvements Needed in Managing Automated A. D-2Decisionmaking by Computers Throughout theF-deral Government (FGMSD-76-5, 4/23/76)

Computer-Related Crimes in Federal Programs D-2FGMSD-75-27, 4/27/76)

Managers Need to Provide Better Protection A, D-1,for Federal Automatic Data Processing Fa- D-2cilities (FGMSD-76-40, 5/10/76)

Sole Source Acquisition of a Computer System B-3(B-133044, 6'1/76)

Problems in Developing the Advanced Logistics D-1l,System (LCD-75-101, "'17/76) D-2

Underutilization of Computer Disk Space at C-l,Defense Supply Aaency (LCD-76-121, 7/7/76) D-2

Better C(mmunica.ion, Cooperation and Co- D-1, D-4,ordination Needed in Department of Defense D-2Development of its Tri-Service MedicalInformation Systems Program (LCD-76-117,10/6/76)

Review of the U.S. Army Corps of Engineers )-1Manxagement Information System (LCD-76-119,10/8/76)

72

APPENDIX II APPENDIX II

Issuesre2orted

Ways to Improve Management of Federally A, D-l,Funded Computerized Models (LCD-75-111, D-48/23/76)

Survey of Automatic Data Processing C-1Activities In the Far East (LCD-76-129,11/4/76)

Need for Expanding Social Security Admini- C-1, D-1stration Computer Facilities (HRD-77-8,11/17/76)

Supplemental. Security Income Payment Errors D-2Can be Reduced (HRD-76-159, 11/18/76)

A Proposed Automated Tax Administration B-4, D-l,System For Internal Revenue Service--An D-2Evaluation of Costs and Benefits (LCD-76-114, 11/23/76)

Review of Interim Computer System Upgrade C-1, D-1for New Orle is Computer Center (LCD-77-101, 12/1/7b,

New Computei Was Not Needed for the St.Louis Computer Center (LCD-76-126, 12/30/76) C-l

Designation of Lawrence Berkeley Laboratory C-1Computer Facility as a Federal ScientificData Processing Center Could Save Millions(LCD-76-112, 12/30/76)

73